Taxeshttps://www.morningsidecenter.org/taxes
enShould the Wealthy Pay More Taxes?https://www.morningsidecenter.org/teachable-moment/lessons/should-wealthy-pay-more-taxes
<span>Should the Wealthy Pay More Taxes?</span>
<div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p class="Normal1" style="margin:0in 0in 0.0001pt"><strong>To The Teacher</strong><br />
</p>
<p>A report published by Oxfam in 2019 showed that the richest 26 individuals in the world own as much wealth as the bottom half of humanity, some 3.8 billion people. This report is just the latest piece of evidence that wealth disparity across the world continues to grow.</p>
<p>A number of high-profile politicians have proposed that the wealthy should pay more in taxes. In early 2019, newly elected Representative Alexandria Ocasio-Cortez caused a minor uproar in Washington, DC by proposing to nearly double the income tax rate on top earners: Under her plan, the rich would pay a tax rate of 70 percent on income over $10 million. Subsequently, Senator Elizabeth Warren, who is running for president, proposed taxing not just large incomes, but also accumulated wealth. Advocates argue that the increase in revenue from these measures would make it easier to fund popular ideas such as Medicare for All and free college tuition. And they contend that taxing the wealth of the top 1 percent could reduce inequality and help level the playing field of our democracy. Opponents argue that these high tax rates would stifle economic activity.</p>
<p>This lesson consists of two readings. The first examines the historical precedent for increased taxes on the wealthy, criticism of the idea, as well as some of the potential economic benefits of these proposals. The second reading outlines the moral and political case for taxing the ultra-wealthy, considering whether a steep tax on wealth could positively impact our democracy. Questions for discussion follow each reading.</p>
<p> </p>
<figure role="group"><img alt="Wealth" data-entity-type="file" data-entity-uuid="91590d16-72ab-4af6-b267-db4179485ce5" src="https://www.morningsidecenter.org/sites/default/files/inline-images/CBOwealth.png" /><figcaption><em>Congressional Budget Office</em></figcaption></figure><p> </p>
<hr /><h3><br />
Reading 1:<br />
When the Rich Paid a Greater Share<br />
</h3>
<p>A report published by Oxfam in 2019 showed that the richest 26 individuals in the world own as much wealth as the bottom half of humanity, some 3.8 billion people. This report is just the latest piece of evidence that wealth disparity across the world continues to grow.</p>
<p>A number of high-profile politicians have proposed that the wealthy should pay more in taxes. In early 2019, newly elected Representative Alexandria Ocasio-Cortez caused a minor uproar in Washington, DC by proposing to nearly double the income tax rate on top earners. Under her plan, the rich would pay a tax rate of 70 percent on income over $10 million. Republicans roundly rejected this proposal, and even many Democrats dismissed it. New Jersey Democratic Representative Bill Pascrell dismissed a higher wealth tax as “comical.”</p>
<p>And yet, a <a href="https://thehill.com/hilltv/what-americas-thinking/425422-a-majority-of-americans-support-raising-the-top-tax-rate-to-70">Hill–HarrisX poll</a> found that 59 percent of voters supported Ocasio-Cortez’s plan. Her proposal was popular in all regions of the country, including the more conservative South. Even 45 percent of self-identified Republicans approved.</p>
<p>Significantly increasing the tax rate on wealthy Americans is a policy idea with historical precedent. For most of the 20th century, the United States had much higher tax rates for the wealthy. In the 1930s, Presidents Hoover and Roosevelt both significantly increased taxes on the wealthy, and higher rates remained in place for decades. In a February 11, 2019, interview with Jeremy Hobson, host of radio station WBUR’s news show Here & Now, historian and journalist Rutger Bregman <a href="https://www.wbur.org/hereandnow/2019/02/11/taxing-rich-rutger-bregman-davos">discussed</a> the impact of this policy:</p>
<blockquote>
<p>In the '50s and '60s, there was this period that historians call 'the golden age of capitalism.' This was the period when we had the highest rates of growth, the most innovation, when we put a man on the moon. And back then, during Eisenhower's presidency, for example, the top marginal tax rate in the U.S. was 91 percent, and the top estate tax was over 70 percent.</p>
<p>This can work perfectly well together with capitalism. It's really what you need if you want to tame capitalism, because by itself, capitalism is a very unstable system and you need these kind of laws and policies and institutions to stabilize it.</p>
</blockquote>
<p><br />
In spite of this track record, there has been a bipartisan drive since the 1970s to reduce tax rates for the wealthiest Americans. Today, there is a debate about whether raising taxes on top earners would have negative effects, possibly increasing tax evasion or making U.S. businesses less entrepreneurial. Alana Samuels, staff writer for The Atlantic, <a href="https://www.theatlantic.com/business/archive/2016/08/is-america-due-for-a-tax-hike/494795/">wrote</a> about these in a 2016 article:</p>
<blockquote>
<p>There are plenty of people who would argue that raising taxes may do more harm than good to the economy. If the rich are taxed more, they may become even more motivated to move their money offshore or to accounts where it can’t be tracked. That could mean less revenue for the government and government services in the end. And if the wealthy aren’t making, or keeping as much money—some say—the result could be a reduction in economic activity, with <a href="http://taxfoundation.org/blog/president-obama-s-capital-gains-tax-proposals-bad-economy-and-budget">less capital available</a> for entrepreneurship, leading to lower rates of business formation and fewer jobs. If true, that would be bad for the entire economy, especially low-wage earners.</p>
<p>But there is historical evidence that suggests these fears may not be more conjecture than actual threat. The U.S. economy is becoming <a href="https://www.brookings.edu/wp-content/uploads/2016/06/declining_business_dynamism_hathaway_litan.pdf">less entrepreneurial</a> over time, suggesting that the wealthy aren’t creating new businesses with all that extra money that used to go to taxes. And in the past, raising top tax rates hasn’t actually depressed economic activity or caused people to stash more money offshore.<br />
</p>
</blockquote>
<p>Citing a paper by economists Thomas Piketty, Emmanuel Saez, and Stefanie Stantcheva, Samuels observes that countries such as the United States and Britain that reduced their tax rates since the 1970s saw inequality rise, while Denmark, which kept top tax rates high, experienced less inequality. She writes that among the 36 countries in the Organization for Economic Cooperation and Development (OECD), as tax rates on upper-income earners fell, the share of income accruing to the top 1 percent grew. Keeping tax rates high didn’t harm a country like Denmark’s GDP either, “suggesting that high taxes didn’t lead productive earners to flee, and low tax rates didn’t motivate them to produce more. According to the paper, while there isn’t a lot of proof that high taxes result in economic slack, there’s a compelling link between low taxation and a growth in inequality.”</p>
<p>A proposal like Representative Ocasio-Cortez’s to dramatically increase taxes on the wealthy may seem radical by today’s standards, but when compared to other periods in U.S. history, it appears to be a less dramatic proposition.<br />
</p>
<h4><strong>For Discussion</strong><br />
</h4>
<ol><li>How much of the material in this reading was new to you, and how much was already familiar? Do you have any questions about what you read?</li>
</ol><ol start="2"><li>According to the reading, what were some of the economic impacts of higher tax rates on the wealthy in the United States in the decades after World War II?</li>
</ol><ol start="3"><li>What are some possible negative consequences of raising the top income tax rate? How might you address a problem such as increased tax evasion?</li>
</ol><ol start="4"><li>Do you think raising the top income tax rate be good or bad for lower-income people? Explain your position.</li>
</ol><ol start="5"><li>A majority of Americans support increased taxes on the wealthy. What are some reasons that politicians might be hesitant to champion this issue or to support more dramatic proposals, such as Rep. Ocasio-Cortez’s?</li>
</ol><p> </p>
<hr /><p> </p>
<h3>Reading Two:<br />
Can a Wealth Tax Help Reduce Inequality?<br />
</h3>
<p>After Representative Ocasio-Cortez proposed an income tax of 70 percent on those making more than $10 million, Senator Elizabeth Warren, who is currently running for president, proposed taxing not just large incomes, but also accumulated wealth. Some estimates hold that a wealth tax on the richest 80,000 American households could bring in $2.75 trillion to the US government over ten years.</p>
<p>A lot of the arguments about greater taxes on the wealthy revolve around the idea that if the government had more tax revenues it could pay for popular programs such as Medicare for All or free college programs. However, there are also moral and ethical implications to the argument about taxing the wealthy that have little to do with raising revenue and a lot to do with our vision for what a good society might look like.</p>
<p>In an article for Jacobin in 2017, Roosevelt Institute fellow and research director Marshall Steinbaum <a href="https://www.jacobinmag.com/2017/10/trump-republicans-tax-plan-wealthy">argued</a> that taxing the wealthy is fundamentally about redistributing power.</p>
<blockquote>
<p>[Progressive taxation] was originally enacted to tame the excesses of wealth and power that dominated the economy in the Gilded Age. The point was not to raise money, nor even, really, to shift the burden of taxation towards those better able to shoulder it (though the latter played a role). Rather, it was to fundamentally alter the distribution of power in society.</p>
<p>When he took office in the depths of the Great Depression, Franklin Roosevelt and his Congressional allies increased the top marginal income tax rate from 25 percent to 63 percent, and a few years later to 79 percent. In 1936, only a single taxpayer earned enough to be subject to that rate: John D. Rockefeller Jr. The point was to make it de facto illegal to be too rich, to better ensure that economic well-being was broadly distributed throughout the economy and society.</p>
<p>When it’s illegal to be too rich, many of the things rich people do — exploit labor, monopolize markets, squeeze supply chains, offshore jobs, asset-strip their companies, commit fraud — aren’t worth doing, since the government takes the lion’s share of the proceeds. When marginal tax rates are high, every other stakeholder has a greater claim on the surplus from participating in a market economy.<br />
</p>
</blockquote>
<p>Elizabeth Warren has proposed not just taxing income, but taxing wealth. While income is the money that people bring in in every year, wealth is the accumulated fortune that gets passed on from generation to generation. Wealthy people get most of their money from dividends and investment gains on money they already have, not from a monthly paycheck.</p>
<p>A wealth tax could be an important policy tool for combating inequality, but it would no doubt be a controversial one. John Cassidy, a staff writer for The New Yorker, <a href="https://www.newyorker.com/news/our-columnists/elizabeth-warrens-wealth-tax-is-an-old-idea-and-its-time-has-come">wrote</a> in a January 31, 2019 article about Warren’s proposed wealth tax:</p>
<blockquote>
<p>Under Warren’s plan, the tax rate on wealth would be two percent, but it would only apply to American households worth at least fifty million dollars, of which there are fewer than eighty thousand. Fortunes of a billion dollars or more would be taxed at three percent….</p>
<p>Not everyone is thrilled about Warren’s proposal, of course. During a visit to New Hampshire, Mike Bloomberg, who [was] considering running for President in 2020, as a Democrat, <a href="https://twitter.com/daveweigel/status/1090305780945948673?s=20">claimed</a> that Warren’s proposal was unconstitutional and brought up Venezuela…. On Capitol Hill, meanwhile, Mitch McConnell and two other Republican senators said that they would <a href="https://www.washingtonpost.com/us-policy/2019/01/28/top-gop-senators-propose-repealing-estate-tax-which-is-expected-be-paid-by-fewer-than-americans-year/">introduce</a> a bill to repeal the federal estate tax, a type of wealth tax that has already been so weakened that it now hits fewer than two thousand families a year. So much for billionaires and Republicans.</p>
<p>But many moderate and progressive Democrats, far from recoiling from the Warren proposal, enthusiastically embraced it. “Wealth inequality in our nation is a national scandal,” Gene Sperling, a veteran Democratic policy wonk who served as a top economic adviser to Bill Clinton and Barack Obama, <a href="https://twitter.com/genebsperling/status/1088544770706726912">wrote</a> on Twitter. “This type of wealth tax that <a href="https://twitter.com/SenWarren">@SenWarren</a> is proposing is essential. It frees up dramatic amounts of resources that make it more likely the vast number Americans can have economic security & a shot at their own small nest egg.”</p>
<p>Since [1994] the share of income and wealth going to the top one percent, and especially the top 0.1 percent, has risen a good deal further, while the wages and incomes of regular American households have stagnated. Meanwhile, the Citizens United ruling, the rise of super pacs, and the lurch to the right of the Republican Party and, of course, the Trump Presidency have demonstrated the growing political power of the billionaire class, throwing into sharper relief [author Edward] Wolff’s point that “the current tax system in the United States leaves these vast differences in wealth and power largely untouched.” ...</p>
<p>In many policy circles, where taxing wealth is widely seen as an idea whose time has come, the debate is shifting to practicalities.<br />
</p>
</blockquote>
<p><a href="https://www.huffpost.com/entry/elizabeth-warren-tax-proposal-is-even-popular-democrats-republicans_n_5c586722e4b09293b206d8bb">Three polls</a> all found that a majority of Americans supported Warren’s wealth tax plan. Between 50 and 61 percent of people favored the plan, while only 20-23 percent opposed it. While a high percentage of Democrats favored the proposal, even among Republicans more people supported than opposed it.</p>
<p>Senator Warren’s push to tax not just income but wealth would represent a major shift in U.S. politics. Nevertheless, even having a discussion of the idea could help to prompt a meaningful conversation about wealth, inequality, and power in our political system.</p>
<p> </p>
<h4>For Discussion<br />
</h4>
<ol><li>How much of the material in this reading was new to you, and how much was already familiar? Do you have any questions about what you read?</li>
</ol><ol start="2"><li>What makes Senator Warren’s wealth tax proposal different from income tax proposals like that of Representative Ocasio-Cortez?</li>
</ol><ol start="3"><li>Do you think that the growing gap between the rich and the poor in our society is a major problem? Why or why not? Should the government aim to reduce this gap?</li>
</ol><ol start="4"><li>Economist Marshall Steinbaum makes the provocative proposal that it should be illegal to be a billionaire. What might be some of the reasons for such an argument? What do you think possible pros and cons of this idea might be?</li>
</ol><ol start="5"><li>What are some reasons, other than raising money for government programs, that politicians might choose to implement a wealth tax? How does this connect to a vision of what our society should look like?</li>
</ol><p> </p>
<p><em>Research assistance provided by John Bergen.</em></p>
</div>
<span><span lang="" about="https://www.morningsidecenter.org/laura-mcclure-0" typeof="schema:Person" property="schema:name" datatype="" xml:lang="">Laura McClure</span></span>
<span>April 20, 2019</span>
Sat, 20 Apr 2019 19:00:19 +0000Laura McClure1311 at https://www.morningsidecenter.orgAmazon Withdraws from Queens: The Debate Over Corporate Subsidieshttps://www.morningsidecenter.org/teachable-moment/lessons/amazon-withdraws-queens-debate-over-corporate-subsidies
<span>Amazon Withdraws from Queens: The Debate Over Corporate Subsidies</span>
<div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span><strong><span><span><span>To the Teacher</span></span></span></strong></span></span></span></span></p>
<p><span><span><span><span><span><span>In February 2019, community organizations declared victory when Amazon withdrew its plans to open a second headquarters (dubbed “HQ2”) in Long Island City—a neighborhood in Queens, New York. </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>After a nationwide search, the company had announced in November 2018 that Long Island City would be one of the sites for expansion. Amazon promised that its new offices would create thousands of jobs and generate billions of dollars in economic activity. But the project drew fierce opposition from local communities and some unions, who criticized Amazon’s record of poor labor practices, the billions of dollars in public subsidies, and the gentrification and displacement that could result from Amazon’s expansion in the neighborhood. They rejected the idea that taxpayers should subsidize a company that has the highest market value of any corporation in the world, and whose CEO and founder, Jeff Bezos, is the richest person on earth. </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>Amidst the controversy, city officials attempted to negotiate with Amazon around issues of subsidies, unionization, and gentrification, but on February 14, 2019, the company abruptly backed out of its plans for HQ2 in Queens. </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>The controversy raised important questions about the costs and benefits of public subsidies for corporate development projects. What was the nature of the deal between New York state and city officials and Amazon? What do cities gain, and what do they lose, when offering large subsidies and other incentives to corporations? </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>This lesson consists of two readings designed to explore the Amazon controversy. The first reading looks at community-based criticisms of Amazon’s planned project in Queens and examines the possible impact of Amazon backing out. The second reading considers the issue of subsidies more generally, asking whether cities should give large corporations incentives to locate in their area. Questions for discussion will follow each reading. </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>For more on the debate over Amazon and corporate subsidies in general, see our previous lesson on this issue, from June 2018: <span><span><a href="https://www.morningsidecenter.org/teachable-moment/lessons/corporate-subsidies-should-public-pay-amazons-new-hq">Corporate Subsidies: Should the Public Pay for Amazon’s New HQ?</a></span></span></span></span></span></span></span></span></p>
<p> </p>
<p><span><span><span><span><span><span><span><span><img alt="Amazon box" data-entity-type="file" data-entity-uuid="6436aaad-a5f3-4a39-9207-57125308e531" src="https://www.morningsidecenter.org/sites/default/files/inline-images/Amazon%20box.jpg" /></span></span></span></span></span></span></span></span></p>
<p> </p>
<p><span><span><span><strong><span><span><span>Reading One: Amazon Backs Out of Queens</span></span></span></strong></span></span></span></p>
<p><span><span><span><span><span><span>In February 2018, community organizations declared victory when Amazon withdrew its plans to open a second headquarters (dubbed “HQ2”) in Long Island City—a neighborhood in Queens, New York. </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>After a nationwide search, the company had announced in November 2018 that Long Island City would be one of the sites for expansion. Amazon promised that its new offices would create thousands of jobs and generate billions of dollars in economic activity. But the project drew fierce opposition from local communities and some unions, who criticized Amazon’s record of poor labor practices, the billions of dollars in public subsidies offered to the company, and the gentrification and displacement that could result from Amazon’s expansion in the neighborhood. They rejected the idea that taxpayers should subsidize a company that has the highest market value of any corporation in the world, and whose CEO and founder, Jeff Bezos, is the richest person on earth.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>Amidst the controversy, city officials attempted to negotiate with Amazon around issues of subsidies, unionization, and gentrification. But on February 14, 2019, the company abruptly backed out of its plans for HQ2 in Queens. </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>Why would local communities and unions oppose the deal struck between New York state and city officials and Amazon? In a February 14, 2019, article for <em>Vox</em>, staff reporter Gabby Del Valle <span><a href="https://www.vox.com/the-goods/2019/2/14/18225003/amazon-hq2-new-york-pulling-out"><span>summarized</span></a></span> the criticisms:</span></span></span></span></span></span></p>
<blockquote>
<p><span><span><span><span><span><span><span>Opposition to Amazon’s decision to put half of its so-called <a href="https://www.vox.com/the-goods/2018/11/5/18066814/amazon-hq2-locations-selected"><span><span>“second headquarters”</span></span></a> in New York City — the other half will be built in the Arlington, Virginia, suburb of Crystal City, which Amazon has seemingly rechristened National Landing — <a href="https://www.vox.com/the-goods/2018/11/6/18065666/amazon-hq2-backlash"><span><span>began as soon as the deal was announced</span></span></a>. While New York Governor Andrew Cuomo and New York City Mayor Bill de Blasio <a href="https://www.vox.com/the-goods/2018/11/19/18103411/cuomo-de-blasio-amazon-hq2-defense"><span><span>lauded the deal</span></span></a> as an opportunity to provide thousands of locals with high-paying tech jobs, other lawmakers decried the <a href="https://blog.aboutamazon.com/company-news/amazon-selects-new-york-city-and-northern-virginia-for-new-headquarters?utm_source=social&utm_medium=tw&utm_campaign=jci&utm_term=amznews&utm_content=HQ2&linkId=59566274"><span><span>massive tax subsidies</span></span></a> the city and state governments promised Amazon, which totaled more than $3 billion.</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>Even though neither the city nor the state was technically <em>giving</em> money to Amazon, critics said these tax incentives <a href="https://www.vox.com/the-goods/2018/11/15/18096181/long-island-city-amazon-hq2-protest"><span><span>were essentially robbing local agencies</span></span></a> like the New York City Housing Authority, which oversees the city’s deteriorated public housing, and the Metropolitan Transit Agency, which is responsible for the city’s crumbling subways and buses, of much-needed revenue.</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>But the fiercest opposition to the HQ2 deal didn’t come from politicians; it came from a coalition of local community organizations, including the immigrant rights group Make the Road New York, New York Communities for Change, VOCAL New York, the local chapter of the Democratic Socialists of America, and the Real Estate, Wholesale, and Department Store Union. These groups not only criticized the subsidies, tax breaks, and other financial incentives Amazon was promised but also expressed concern that the tech giant’s presence in the already heavily gentrified neighborhood of Long Island City would <a href="https://www.vox.com/policy-and-politics/2018/11/9/18067908/amazon-hq-2-new-york-virginia-dc-lic-crystal-city"><span><span>push low-income people out of the area</span></span></a>.</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>Critics also lambasted Amazon’s<a href="https://www.vox.com/2018/12/12/18137604/amazon-workers-new-york-unionize"><span><span> staunch anti-union stance</span></span></a>; the conditions in its<a href="https://www.vox.com/the-goods/2018/12/12/18138246/amazon-hq2-new-york-city-hearing"><span><span> Staten Island warehouse</span></span></a> and<a href="https://www.vox.com/the-goods/2018/12/14/18141291/amazon-fulfillment-center-east-africa-workers-minneapolis"><span><span> other fulfillment centers around the world</span></span></a>, where workers often complain of long hours, low pay, and unrealistic expectations; and the fact that the company <a href="https://www.theverge.com/2018/10/23/18013376/amazon-ice-facial-recognition-aws-rekognition"><span><span>once pitched its facial recognition system to Immigration and Customs Enforcement</span></span></a>….</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>“We applaud the news that Amazon is pulling out of HQ2,” read a statement from a coalition of advocacy groups including Make the Road and New York Communities for Change. “This victory is a clear demonstration of the power of workers and communities across Queens and New York who came together and are fighting for a city that works for us and not for billionaires like Bezos.”</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>[<span><a href="https://www.vox.com/the-goods/2019/2/14/18225003/amazon-hq2-new-york-pulling-out"><span>www.vox.com/the-goods/2019/2/14/18225003/amazon-hq2-new-york-pulling-out</span></a></span>] </span></span></span></span></span></span></p>
<p> </p>
</blockquote>
<p><span><span><span><span><span><span>While many community groups celebrated Amazon’s departure, some politicians and labor groups were dismayed at the loss in potential new jobs. A day after the abrupt withdrawal, Hector Figueroa, <span><span>president of 32BJ Service Employees International Union, </span></span>wrote an op-ed in the <em>New York Daily News</em> <span><span><a href="https://www.nydailynews.com/opinion/ny-oped-cutting-off-our-nose-to-spite-our-face-20190215-story.html"><span>arguing</span></a></span></span><span><span> that progressives had made a mistake in pushing Amazon to back out:</span></span></span></span></span></span></span></span></p>
<blockquote>
<p><span><span><span><span><span><span><span>Amazon’s opponents can claim that they “saved” some $3 billion in corporate welfare — but at the cost of about $25 billion in revenue for New York City in the coming decades. To put it in context, this is more money than the millionaires’ tax, a major progressive priority, would generate over the same period of time….</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>Let’s turn to the criticism that Amazon is anti-union. That’s true. Here’s a newsflash: that’s also true of pretty much every private sector employer in America, including the ones that have unions. You’d be hard pressed to find any large employers that actually prefer to have their workers represented by a union or that are even indifferent on the subject. Power isn’t something that corporations give to their workers, it’s something workers take from their employers by joining together and organizing….</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>Currently we represent thousands of those workers; we’ve made by far the biggest inroads in the New York-area airports. And our union was able to secure a commitment from Amazon that would have created thousands of permanent family-sustaining jobs with good wages and benefits for cleaners and security guards at HQ2.</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>There is a reason for that: New York City is where the labor movement already has the most density and the most political power. If there is any place where it would be possible to leverage the labor movement’s existing power to crack open the door to collective bargaining for Amazon workers, it is here….</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>What exactly do Amazon’s opponents have to celebrate?.... They have succeeded in eliminating billions of dollars in revenue to make desperately needed investments in public transit and affordable housing harder not easier. </span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>[<span><a href="https://www.nydailynews.com/opinion/ny-oped-cutting-off-our-nose-to-spite-our-face-20190215-story.html"><span>https://www.nydailynews.com/opinion/ny-oped-cutting-off-our-nose-to-spite-our-face-20190215-story.html</span></a></span>] </span></span></span></span></span></span></p>
<p> </p>
</blockquote>
<p><span><span><span><span><span><span>Opponents of the deal, however, place blame on Amazon instead of community opponents. The Retail, Wholesale and Department Store Union (RWDSU) argued that it was right for critics to demand better of Amazon, but that the company refused to improve conditions for workers in its warehouses. Chelsea Connor, a spokeswoman for the union, <span><a href="https://www.nytimes.com/2019/02/14/nyregion/amazon-reaction-quotes-ny.html"><span>told </span></a><em><a href="https://www.nytimes.com/2019/02/14/nyregion/amazon-reaction-quotes-ny.html"><span>The New York Times</span></a></em></span>: “Rather than addressing the legitimate concerns that have been raised by many New Yorkers, Amazon says you do it our way or not at all, we will not even consider the concerns of New Yorkers.” </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>New York City Councilman Costa Constantinides likewise <span><a href="https://www.cityandstateny.com/articles/politics/new-york-city/reactions-to-amazons-pull-out-nyc.html"><span>criticized the process</span></a></span> through which Amazon secured subsidies and spoke out against its refusal to negotiate with critics:<strong> </strong>“From the beginning, the process of luring Amazon to western Queens ignored the community and proposed a giveaway of $3 billion to a multi-billionaire dollar corporation,” he said in a statement. “It is no shock to anyone that this was a disaster from the start and bad policy. New York City has long-standing processes in place to ensure that any project — from a sidewalk cafe to a corporate headquarters — considers the community’s needs. Our objections were never answered and we rightfully opposed this bad deal. Today is the natural result of plugging your ears to the legitimate concerns of the people and bypassing them in favor of corporations."</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>State Senator Michael Gianaris was likewise dismissive, <span><a href="https://www.nytimes.com/2019/02/14/nyregion/amazon-hq2-queens.html#click=https://t.co/vv4FLow9ZQ"><span>telling </span></a><em><a href="https://www.nytimes.com/2019/02/14/nyregion/amazon-hq2-queens.html#click=https://t.co/vv4FLow9ZQ"><span>The New York Times</span></a></em></span><em>:</em><strong> </strong>“Like a petulant child, Amazon insists on getting its way or takes its ball and leaves. Even by their own words, Amazon admits they will grow their presence in New York without their promised subsidies. So what was all this really about?”</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>The controversy will certainly affect future debate about public subsidies for economic development, and how community concerns are incorporated into the process. </span></span></span></span></span></span></p>
<p> </p>
<hr /><p><span><span><span><strong><span><span><span>For Discussion</span></span></span></strong></span></span></span></p>
<p> </p>
<ol><li><span><span><span><span><span><span>How much of the material in this reading was new to you, and how much was already familiar? Do you have any questions about what you read?</span></span></span></span></span></span><br />
</li>
<li><span><span><span><span><span><span>What were some arguments for Amazon receiving major public subsidies to open its “HQ2” in Queens? Do you find these arguments persuasive? Why or why not? What were some arguments for Amazon not receiving these subsidies? Do you find these arguments persuasive? Why or why not?</span></span></span></span></span></span><br />
</li>
<li><span><span><span><span><span><span>Many people were shocked that grassroots activists were able to reverse a major plan made by the world’s largest corporation in collaboration with the governor of New York and mayor of New York City. Does the success of these activists surprise you? Do you think it signals a shift in the relative power of activists and corporations? </span></span></span></span></span></span><br />
</li>
<li><span><span><span><span><span><span>Community groups such as Make the Road New York argued that bringing high-paid tech workers into an already-crowded neighborhood would drive lower-income families out of their homes in Queens, displace small businesses, deepen inequality, and negatively impact communities of color. How should cities seeking to promote the creation of new jobs address concerns about displacement? What are some steps that you might take to address the concerns of local residents about such projects?</span></span></span></span></span></span><br />
</li>
<li><span><span><span><span><span><span>Some community groups that were critical of the Amazon deal wanted the company to stay, but to negotiate better terms with workers and the city. However, others were happy to see the company leave altogether. What do you think? Explain your position. </span></span></span></span></span></span></li>
</ol><p> </p>
<hr /><p><span><span><span><strong><span><span><span>Reading Two: Should We Subsidize Corporate Expansion at All?</span></span></span></strong></span></span></span></p>
<p><span><span><span><span><span><span>In the competition for HQ2, New York City was far from the only metropolitan area to offer Amazon extensive incentives. An economic development group in Tucson, Arizona <span><a href="https://www.azcentral.com/story/money/business/economy/2017/09/19/amazon-rejects-tucsons-gift-21-foot-saguaro-cactus/682181001/"><span>sent</span></a></span> Amazon a 21-foot saguaro cactus. Stonecrest, a suburb of Atlanta, Georgia, <span><a href="https://www.theverge.com/2017/10/3/16413866/new-amazon-headquarters-stonecrest-georgia-bid"><span>offered</span></a></span> to rename itself “Amazon.” And every city in the running offered some level of subsidies, some far larger than New York’s $3 billion. </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>The desire of cities to attract Amazon, and the controversy over the company’s proposed project in New York, has raised some important questions: Why do cities offer large subsidies to corporations to locate in their areas? What do they gain, and what do they lose, when offering such large subsidies? </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>The prospect of a new big box store, factory, or corporate headquarters moving to your city or region might seem beneficial, and the case for offering subsidies in exchange for new jobs might seem obvious from an economic development standpoint. But research demonstrates that cities and regions often benefit little in the long term from offering subsidies. In a February 21, 2018, article in <em>The Conversation</em>, Amihai Glazer, Professor of Economics at UC-Irvine, <span><a href="https://theconversation.com/why-cities-should-stop-playing-amazons-game-and-quit-offering-companies-tax-incentives-112114"><span>made the case</span></a></span> for why incentives don’t work:</span></span></span></span></span></span></p>
<blockquote>
<p><span><span><span><span><span><span><span><a href="http://www.economics.uci.edu/%7Eaglazer/TaxIncentivesInefficient.pdf"><span>In my own research</span></a></span></span></span></span><span><span><span> as an economist studying corporate welfare, I have found and reviewed much evidence on the effectiveness of tax and other incentives. My conclusion: Incentives just don’t work.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>That’s in part because companies <a href="https://theconversation.com/amazon-hq2-texas-experience-shows-why-new-yorkers-were-right-to-be-skeptical-111137"><span><span>aren’t obligated to follow through</span></span></a> on their promises. Just ask Boston.</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>In February, around the same time Amazon walked away from its NYC plans, General Electric announced <a href="http://fortune.com/2019/02/15/general-electric-boston-tax-incentives/"><span><span>it will cut back</span></span></a> on jobs and investment in its new headquarters in Boston. Only three years ago, the company’s plan to relocate from Connecticut in exchange for $25 million in tax breaks <a href="https://www.thereporter.com/2016/01/13/general-electric-to-move-headquarters-to-boston/"><span><span>was touted as a big deal</span></span></a> for Boston.</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>Or consider General Motors, which in 2012 said it would build a new electric vehicle facility in White Marsh, Maryland, <a href="https://www.baltimoresun.com/news/maryland/baltimore-county/bs-xpm-2010-09-20-bs-md-co-council-approves-gm-20100920-story.html"><span><span>after receiving a subsidy</span></span></a> of $105 million from the U.S. Department of Energy, $6 million in grants from Baltimore County and $4.5 million in state grants for economic development and job training. This past November, the automaker <a href="https://www.baltimoresun.com/business/bs-gm-cuts-20181126-story.html"><span><span>announced</span></span></a> it will shut down the plant as part of a restructuring effort….</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>A 2016 study by economist Carlianne Patrick <a href="https://doi.org/10.1111/ecin.12339"><span><span>compared counties that won large new factories</span></span></a> with those that lost out during the bidding process. She found that they typically did not generate more revenue for the local government than it spent on incentives, even if they did induce small increases in economic activity.</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span><a href="https://econpapers.repec.org/RePEc:ntj:journl:v:67:y:2014:i:2:p:351-386"><span><span>Another study by Patrick found</span></span></a> that making it easier for local governments to offer aid to companies reduced employment in rural counties. And in 2018, <a href="https://doi.org/10.17848/wp18-291"><span><span>the W.E. Upjohn Institute for Employment Research concluded</span></span></a> that factories and offices that received an incentive had employment growth 3.7 percent slower than those that didn’t receive the inducement.</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>More than that, a <a href="http://dx.doi.org/10.2139/ssrn.3227086"><span><span>review of 30 different studies</span></span></a> by the Upjohn Institute found that incentives actually influence a company’s decision to invest in less than a quarter of cases. In other words, most of the time, a company would have made the investment with or without the tax break or other incentive.</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>[<span><a href="https://theconversation.com/why-cities-should-stop-playing-amazons-game-and-quit-offering-companies-tax-incentives-112114"><span>https://theconversation.com/why-cities-should-stop-playing-amazons-game-and-quit-offering-companies-tax-incentives-112114</span></a></span>] </span></span></span></span></span></span></p>
<p> </p>
</blockquote>
<p><span><span><span><span><span><span>Corporate demands for subsidies and tax breaks are not new. This process is repeated over and over again across the country. In a February 20, 2019, article in the<em> New Yorker</em>, staff writer Sheelah Kolhatkar <span><a href="https://www.newyorker.com/business/currency/does-amazons-retreat-from-new-york-signal-the-end-of-corporate-subsidies"><span>explored</span></a></span> just how widespread this practice is, quoting financial reporter David Cay Johnston:</span></span></span></span></span></span></p>
<blockquote>
<p><span><span><span><span><span><span>“For years, big corporations have been getting tax forgiveness and tax abatements, as well as, in many cases, money to train workers, and, in some cases, outright cash grants or subsidized loans,” [said Johnston], the author of “<span><a href="https://www.amazon.com/dp/1591842484/?tag=thneyo0f-20"><span>Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill)</span></a></span>,” which explores corporate subsidies, told me recently. “The reality, unfortunately, is that this is going on all over the country.”....</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>According to Johnston, state and municipal governments have extended publicly financed benefits to corporations for decades, but the practice didn’t really take off until the 1990s, when major chain stores and developers of sports stadiums began to demand large tax breaks and construction financing in exchange for promises to create jobs and revitalize neighborhoods. In recent years, dozens of companies, including General Motors, Boeing, and Intel, have taken advantage of such deals. (The New York <em>Times</em><a href="https://www.nytimes.com/2012/12/02/us/how-local-taxpayers-bankroll-corporations.html"> </a><span><a href="https://www.nytimes.com/2012/12/02/us/how-local-taxpayers-bankroll-corporations.html"><span>calculated</span></a></span>, in 2012, that states, counties, and cities are giving away more than eighty billion dollars a year in subsidies to large companies.) In many instances, though, the promised jobs and other benefits to the community never materialize or end up being more modest than was initially suggested in flashy press announcements.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>Johnston explained how the process typically works: “You come in as Walmart or Home Depot or Lowes and say, ‘I want to build a store on that land, and the guy who owns it doesn’t want to sell it.’” In its eagerness to entice the company to build there, the local government might seize the land through eminent domain and then sell municipal bonds—essentially borrowing money—against the lease on the store. The chain then builds its store and parking lot and employs local people to work there. The bonds that the government issued, meanwhile, are repaid not by the company but through residents’ sales taxes. “When you check out of a Walmart that has this deal, and you pay eight dollars and change in sales tax, that money does not go to cops, library, schools, or parks,” Johnston told me. “That money goes to pay the bonds.” </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>Approximately 90 per cent of Walmart distribution centers were built this way, according to Johnston. The situation is exacerbated by the fact that states, and even different municipalities within states, can compete with one another to offer the most generous subsidies and the lightest regulation, leading to an arms race of giveaways. “Often these things turn out to be complete frauds,” Johnston said. </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>[<span><a href="https://www.newyorker.com/business/currency/does-amazons-retreat-from-new-york-signal-the-end-of-corporate-subsidies"><span>https://www.newyorker.com/business/currency/does-amazons-retreat-from-new-york-signal-the-end-of-corporate-subsidies</span></a></span>]</span></span></span></span></span></span></p>
<p> </p>
</blockquote>
<p><span><span><span><span><span><span>Johnston was less critical of the Amazon deal than other projects that have gone forward with major subsidies in New York City, such as the Goldman Sachs headquarters in lower Manhattan, and Yankee Stadium in the Bronx. But it is clear that, by putting a spotlight on the issue of public incentives for private development, the Amazon debate has made it more likely that other deals will be more carefully scrutinized in the future.</span></span></span></span></span></span></p>
<p> </p>
<hr /><p><span><span><span><strong><span><span><span>For Discussion</span></span></span></strong></span></span></span></p>
<p> </p>
<ol><li><span><span><span><span><span><span>How much of the material in this reading was new to you, and how much was already familiar? Do you have any questions about what you read?</span></span></span></span></span></span><br />
</li>
<li><span><span><span><span><span><span>According to the reading, what does long-term research demonstrate about how public subsidies affect local economies?</span></span></span></span></span></span><br />
</li>
<li><span><span><span><span><span><span>Critics charge that when cities must compete with one another to offer ever-larger subsidies to corporations to move to their areas, it creates a “race to the bottom” that hurts everyone. What do they mean by the phrase “race to the bottom”? Do you find this argument convincing? Why or why not?</span></span></span></span></span></span><br />
</li>
<li><span><span><span><span><span><span>Sometimes public subsidy contracts include “clawback” provisions, which say<span><span> that a company must meet its promises to create a specific number of jobs, or else taxpayers will get some of the subsidy back. Would including a clawback provision in the contract between New York and Amazon affect how you felt about that deal? Why or why not?</span></span></span></span></span></span></span></span><br />
</li>
<li><span><span><span><span><span><span><span>Has your community provided public subsidies to corporations in exchange for jobs? If so, was there community opposition? What was the outcome? If you don’t know, how could you find out? </span></span></span></span></span></span></span></li>
</ol><p> </p>
<hr /><p><span><span><span><em><span><span><span>Research assistance provided by John Bergen.</span></span></span></em></span></span></span></p>
</div>
<span><span lang="" about="https://www.morningsidecenter.org/sara-carrero-0" typeof="schema:Person" property="schema:name" datatype="" xml:lang="">Sara Carrero</span></span>
<span>February 27, 2019</span>
Wed, 27 Feb 2019 19:50:19 +0000Sara Carrero1285 at https://www.morningsidecenter.orgCorporate Subsidies: Should the Public Pay for Amazon’s New HQ?https://www.morningsidecenter.org/teachable-moment/lessons/corporate-subsidies-should-public-pay-amazons-new-hq
<span>Corporate Subsidies: Should the Public Pay for Amazon’s New HQ?</span>
<div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><strong><span><span><span><span>To The Teacher:</span></span></span></span></strong></span></span></span><br />
</p>
<p><span><span><span><span><span><span><span>The online retail giant Amazon is currently in the process of choosing a city in which to build a second headquarters. Because the company promises to bring jobs to whatever metropolitan area it chooses, many cities have made dramatic bids to entice Amazon to choose them for its new home. Almost certain to be included in every package offered to Amazon are large public subsidies. </span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>This lesson examines the Amazon story and invites students to think critically about the practice of providing public subsidies to private companies—a practice with sometimes questionable benefits for those who foot the bill. </span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>The first reading explores some of the arguments for and against using taxpayer dollars or tax abatements to lure companies. The second reading considers ways cities can ensure that companies like Amazon hold up their end of the bargain through strategies such as "clawback" rules and "tracking" for public subsidies. Questions for discussion follow each reading.</span></span></span></span></span></span></span></p>
<p> </p>
<hr /><p> </p>
<p><span><span><span><strong><span><span><span>Reading One<br />
Amazon Bidding War</span></span></span></strong></span></span></span></p>
<p><br /><span><span><span><span><span><span><span>Online retail giant Amazon is currently in the process of choosing the city where it will build a second headquarters. (Its main headquarters is in Seattle.) Considering that Amazon will bring many jobs to whatever metropolitan area it chooses, it is not surprising that many cities would welcome the company. But is it worth the price they might have to pay?</span></span></span></span></span></span></span></p>
<p><span><span><span><span><span><span><span>On January 18, 2018, Mark Strassman reported for <em><a href="https://www.cbsnews.com/news/amazon-hq2-20-finalists-competing-to-host-new-headquarters/">CBS News</a></em> that, as Amazon narrowed its search, the cities still in the running began designing packages to entice the company:</span></span></span></span></span></span></span></p>
<blockquote>
<p><span><span><span><span><span><span>Cities all over America are competing to host a new Amazon headquarters and the jobs that go with it. On Thursday, Amazon <span><a href="https://www.cbsnews.com/news/amazon-hq2-cities-list-top-20-list-of-finalists-announced-today/"><span>whittled down the choices from 238 to 20</span></a></span>. </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>Finding a home for Amazon's second headquarters -- the company calls it HQ2 -- became corporate catnip to a frenzy of suitors coast to coast. American communities courted the company with gifts of land and tax incentives worth billions. Stonecrest, Georgia, proposed 345 free acres and even offered to change its name. </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>Deliberations were secret, but Amazon had a type in mind -- a metropolitan area of more than 1 million people that's a hub for top tech talent. </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>Atlanta touted its airport, highways and business climate. The city made Amazon's final cut. </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>"The number of jobs and just how positively it could change the landscape of the city. It is a big deal," said Atlanta Mayor Keisha Lance Bottoms.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>These 20 names on Amazon's new dance card fell heavily in the Midwest, Southeast and Northeast. Here's why: Amazon, the world's largest internet retailer, proposes spending $5 billion to build HQ2, and create up to 50,000 jobs that average $100,000.</span></span></span></span></span></span><br />
</p>
</blockquote>
<p><span><span><span><span><span><span><span>It’s almost certain that every city being considered will offer Amazon a package that will include large public subsidies. Based on what we know about the bids from cities that were<em> not</em> chosen for the shortlist, the subsidies will be exceptionally large. </span></span></span></span><span><span><span>St. Louis and Southern Illinois offered a combined <span><a href="https://www.bizjournals.com/stlouis/news/2018/01/18/st-louis-is-not-a-finalist-for-amazons-hq2.html"><span>incentive package</span></a></span> worth $7.1 billion. Newark, New Jersey, offered a <span><a href="https://www.wsj.com/articles/newark-offers-7-billion-in-incentives-to-lure-amazon-1508191648"><span>package worth</span></a></span> about $7 billion. Maryland offered a combination of about $3 billion in state tax breaks and $2 billion in state and local transportation and infrastructure upgrades. The governor called the offer essentially “a blank check.” </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>Cities offering large public subsidies and tax breaks to corporations has become standard practice in recent times. For city government officials around the country, the prospect of attracting or keeping jobs and spurring economic growth justifies these outlays. But to some observers, the balance of power in negotiations tilts heavily towards corporations, who can play cities against one another by threatening to pack up and leave. As Louis Story reported for the <em><a href="https://www.nytimes.com/2012/12/02/us/how-local-taxpayers-bankroll-corporations.htm">New York Times</a> </em>on December 1, 2012:</span></span></span></span></span></span></p>
<blockquote>
<p><span><span><span><span><span><span>A <em>Times</em> investigation has examined and tallied thousands of local incentives granted nationwide and has found that states, counties, and cities are giving up more than $80 billion each year to companies. The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>The cost of the awards is certainly far higher. A full accounting, the <em>Times</em> discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>“How can you even talk about rationalizing what you’re doing when you don’t even know what you’re doing?” said Timothy J. Bartik, a senior economist at the <span><a href="http://www.upjohninst.org/"><span>W.E. Upjohn Institute for Employment Research</span></a></span> in Kalamazoo, Mich.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>The <em>Times</em> analyzed more than 150,000 awards and created a <span><a href="http://www.nytimes.com/interactive/2012/12/01/us/government-incentives.html"><span>searchable database of incentive spending</span></a></span>. The survey was supplemented by interviews with more than 100 officials in government and business organizations as well as corporate executives and consultants.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States.</span></span></span></span></span></span><br />
</p>
</blockquote>
<p><span><span><span><span><span><span>Considering the desperation of the cities that remain in the race for Amazon HQ2, the benefits of whatever deal is ultimately struck with Amazon are likely to tilt overwhelmingly in the company’s favor, rather than toward the public in the chosen city. It does not have to be this way, however. As we’ll discuss in the next reading, the prospect of a new company coming to town need not spark a race to the bottom. Rather, it is possible for cities to push to get their money’s worth when companies like Amazon come to set up shop.</span></span></span></span></span></span></p>
<p> </p>
<hr /><p> </p>
<p><span><span><span><strong><span><span><span>For Discussion:</span></span></span></strong></span></span></span><br />
</p>
<ol><li>
<p><span><span><span><span><span><span>How much of the material in this reading was new to you, and how much was already familiar? Do you have any questions about what you read?</span></span></span></span></span></span></p>
</li>
</ol><ol start="2"><li>
<p><span><span><span><span><span><span>According to the reading, what is the rationale for giving public subsidies to private companies? </span></span></span></span></span></span></p>
</li>
</ol><ol start="3"><li>
<p><span><span><span><span><span><span>According to the <em>New York Times</em> report, the balance of power in negotiations between corporations and city governments often tilts in favor of the businesses. What are some reasons for this? </span></span></span></span></span></span></p>
</li>
</ol><ol start="4"><li>
<p><span><span><span><span><span><span>What do you think? Do you think private companies should receive public money? Why or why not? </span></span></span></span></span></span></p>
</li>
<li>
<p><span><span><span><span><span><span>Do you think it would be worth it for your city to spend tax money to attract the new Amazon headquarters? Explain your position.</span></span></span></span></span></span></p>
</li>
</ol><p> </p>
<hr /><p> </p>
<p><span><span><span><strong><span><span><span>Reading Two<br />
How Can Taxpayers Get Their Money’s Worth?</span></span></span></strong></span></span></span></p>
<p><br /><span><span><span><span><span><span>As long as cities and states are willing to undercut one another to attract businesses, those businesses will hold the upper hand at the bargaining table. That is why some opponents of public subsidies argue that the government should intervene to curb this behavior and restore some balance to negotiations. As Emily Badger reported for the <em><a href="https://www.washingtonpost.com/news/wonk/wp/2014/09/15/should-we-ban-states-and-cities-from-offering-big-tax-breaks-for-jobs/?utm_term=.94ec0946e39c">Washington Post</a> </em>on September 15, 2014:</span></span></span></span></span></span></p>
<blockquote>
<p><span><span><span><span><span><span>[Good Jobs First director Greg] LeRoy doesn't realistically expect any federal law [against tax incentives] any time soon. But he suggests a more modest alternative. In the mid-1980s, the federal government threatened to <span><a href="http://en.wikipedia.org/wiki/National_Minimum_Drinking_Age_Act"><span>withhold a share of federal highway funds</span></a></span> from any state that didn't enforce a legal drinking age of 21. We should <span><a href="http://www.goodjobsfirst.org/sites/default/files/docs/pdf/planning_op-ed_nov2012.pdf"><span>do the same today around economic development incentives</span></a></span>, LeRoy says: withhold 10 percent of some coveted federal funding stream — maybe Community Development Block Grants — from states that actively poach jobs from each other.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>He calls it the "small carrot model," although others would probably see his plan as wielding a sharp stick.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>So what would happen in this new world without interstate (or inter-city) economic warfare?</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>"We had a world in which this didn’t exist," Funkhouser says. That world lasted up through about the 1970s, by his metric. "We invested in the Interstate Highway System. We spent money on stuff that actually does create jobs: investment in infrastructure and investment in education. You need to have tools, excellent port facilities, excellent highways, and you need a highly skilled workforce. We have taken that money and shifted it away from the real generators of economic wealth and we’ve given it to people to line their pockets.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>"If a state said, 'No, instead of $3 billion for Boeing, we’re going to invest it in schools, and we’re going to invest it in highways,' they would win," he says. "Nevada did not win on Tesla."</span></span></span></span></span></span><br />
</p>
</blockquote>
<p><span><span><span><span><span><span>Even if a complete end to the system of public subsidies may not be on the horizon, smaller reforms may be possible. Critics of subsidies argue that, when taxpayer resources are used to attract companies, we often have no way of knowing whether these companies produce the jobs they promise. That is because there is no requirement to track the results of public subsidies. And without this information, it is impossible to hold them accountable when they do not uphold their sides of the bargain. </span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>As Masako Melissa Hirsch and Charlotte Keith report in a March 30, 2017 article for the <em><a href="https://www.timesunion.com/local/article/Tracking-state-subsidies-stymied-by-inconsistent-11037969.php">Times Union</a>, </em>critics of subsidies in New York have advocated implementing a more robust system for “tracking” both the subsidies that are given out and the behavior of companies that receive the incentives. Hirsch and Keith write:</span></span></span></span></span></span></p>
<blockquote>
<p><span><span><span><span><span><span>Indeed, study after study by watchdog groups, the state comptroller's office and Gov. Andrew Cuomo's tax-reform commission has reached the same conclusion: the way agencies track the subsidies they hand out makes it difficult to determine whether the programs are effective and companies have lived up to their promises.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>"There are no real measures to determine if taxpayers are getting their bang for the buck," said Andrea Miller, a policy analyst with state Comptroller Thomas DiNapoli….</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>Last December, six good-government groups demanded reforms to the state's process of awarding and monitoring economic development contracts. They were responding to the indictments of 10 state officials and developers who were charged by state and federal prosecutors with bid-rigging and bribery in connection with the awarding of state contracts for projects in Buffalo, Syracuse and Albany.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>"Until there are major reforms, billions of dollars in taxpayer handouts to businesses remain ripe for corruption and abuse. The public still does not know exactly who is getting our money and what they are doing with it — and Albany [political leaders in New York’s state capitol] seems to like it that way," said John Kaehny, executive director of Reinvent Albany.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>Among their proposed reforms was the state's publication of a "Database of Deals," allowing the public to see the costs and benefits of all subsidy deals. A handful of states have robust databases, including Illinois and North Carolina, said LeRoy of Good Jobs First.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>"Taxpayers should know if they're getting their money's worth," he said. </span></span></span></span></span></span></p>
</blockquote>
<p><span><span><span><span><span><span>Going a step further, cities and states could demand that companies that do not live up to their promises to create jobs must give back funds to the public. Such a requirement is known as a “clawback” provision. Former Ventura, California, mayor William Fulton explained the process in a January 1, 2010, article for <em><a href="http://www.governing.com/columns/eco-engines/Clawback-Clause.html">Governing</a></em>:</span></span></span></span></span></span></p>
<blockquote>
<p><span><span><span><span><span><span>Four years ago, Georgia made a tax-subsidy deal with Alltel Corp., a telecommunications company based in Little Rock. Under Georgia's "revenue and apportionment" program, Alltel received tax breaks totaling $13.5 million over five years—one of six companies (along with Turner Broadcasting, HBO, General Electric and others) to receive such benefits.<br /><br />
Even at that price, it would have been a good deal for Georgia. The agreement called for the company to produce almost 800 new jobs at its Alpharetta, Georgia, headquarters. That's about $17,000 per job, but Alltel promised the jobs would pay on average more than $60,000 per year.<br /><br />
Last spring, however, Alltel acknowledged that it hadn't met the terms of the deal. After instituting company-wide cutbacks in 2001, the company wound up with about 135 more jobs in Georgia than it had in 1998, according to one estimate. And there was no evidence that the jobs paid anywhere near $60,000 per year.….</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>[Georgia] might be able to get some of its $13.5 million back—if it chooses to pursue Alltel under the "clawback" provisions contained in the state's tax-subsidy law. The law isn't airtight; Georgia doesn't even get a compliance report from the company unless state officials ask for one.<br /><br />
The state may or may not pursue a settlement. But the Alltel case is the latest example of an emerging question in economic development: If a company getting tax breaks doesn't deliver the goods, should the government agency involved demand its money back?<br /><br />
Clawback provisions—the term is taken from tax law—are increasingly common and some givebacks are taking place. United Airlines returned more than $30 million to government agencies in Indiana last year after failing to meet its jobs goal for a maintenance hub at Indianapolis International Airport—a deal that gave the airline $300 million in tax breaks….</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>Nonetheless, enforcing clawback provisions still isn't the norm. By and large, the corporate-tax subsidy is still viewed as a one-way street in the United States.</span></span></span></span></span></span></p>
<p><span><span><span><span><span><span>On the surface, it makes sense to insist on a clawback. But whether it's realistic depends on how you view the true nature of a tax subsidy. It can be seen as a loan to a company: a financial liability that must be paid back if things don't pan out. Or it can be considered an investment: a financial bet by the government that the company will grow and prosper.</span></span></span></span></span></span><br />
</p>
</blockquote>
<p><span><span><span><span><span><span>The competition for Amazon’s second headquarters indicates that the practice of using public subsidies to attract corporations is still alive and well. However, citizens do have tools they can use to hold companies to the promises they make.</span></span></span></span></span></span></p>
<p> </p>
<hr /><p> </p>
<p><span><span><span><strong><span><span><span>For Discussion:</span></span></span></strong></span></span></span><br />
</p>
<ol><li>
<p><span><span><span><span><span><span>How much of the material in this reading was new to you, and how much was already familiar? Do you have any questions about what you read?</span></span></span></span></span></span></p>
</li>
</ol><ol start="2"><li>
<p><span><span><span><span><span><span>Short of ending subsidies altogether, what are some measures the public can demand to make sure they get a worthwhile return on the investment of taxpayer resources in attracting businesses?</span></span></span></span></span></span></p>
</li>
</ol><ol start="3"><li>
<p><span><span><span><span><span><span>According to the reading, what are “clawback” provisions and how do they work?</span></span></span></span></span></span></p>
</li>
</ol><ol start="4"><li>
<p><span><span><span><span><span><span>What do you think? Would you favor greater tracking and accountability for public subsidies? What arguments for or against these measures do you think are most persuasive?</span></span></span></span></span></span></p>
</li>
</ol><p> </p>
</div>
<span><span lang="" about="https://www.morningsidecenter.org/laura-mcclure-0" typeof="schema:Person" property="schema:name" datatype="" xml:lang="">Laura McClure</span></span>
<span>June 4, 2018</span>
Mon, 04 Jun 2018 19:21:26 +0000Laura McClure1205 at https://www.morningsidecenter.orgA Historic Tax Bill Moves through Congresshttps://www.morningsidecenter.org/teachable-moment/lessons/historic-tax-bill-moves-through-congress
<span>A Historic Tax Bill Moves through Congress</span>
<div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><h4>To the Teacher: </h4>
<p>Ask students to read the following summary of the 2017 Republican tax bill and the controversy over it. (<a href="https://www.morningsidecenter.org/sites/default/files/files/Reading%20–%20Historic%20Tax%20Bill.pdf">A pdf version of the reading is here</a>.) Afterwards, ask students for any questions they have about the reading, and engage them in discussion using the questions below. Consider continuing the discussion as you follow the progress of the bill in the coming weeks.</p>
<p> </p>
<hr /><p> </p>
<p>Congress is poised to enact a tax law of historic proportions.</p>
<p>The Senate released its version of the Tax Cuts and Jobs Act (H.R. 1) on November 9, 2017, a week after the House passed its version of the bill. Both bills were passed by Republicans only, receiving no votes from Democrats. The Act won't go into law until both houses pass an identical bill and President Trump signs it.</p>
<p>Although the two bills are different, their intent and effect is similar: to make large tax cuts for the wealthiest individuals and corporations and temporarily cut taxes for middle class taxpayers. Under the Senate version of the bill:<br />
</p>
<ul><li style="margin–left: 0.25in;"><strong>Corporations would benefit.</strong> The tax rate for big businesses would fall from 35 percent to 20 percent starting in 2019, putting the U.S. corporate tax rate at a lower level than many other foreign nations. Companies would be allowed to bring back any money they have stored overseas at the very low tax rate of 14.5 percent.<br />
</li>
<li style="margin–left: 0.25in;"><strong>The very rich would benefit. </strong>The top tax rate for millionaires would fall from 39.6 percent to 38.5 percent. More rich families would be exempt from paying the estate tax when they pass property and other inheritance to their children. (The House version of the bill would eliminate the estate tax altogether after 2023.) The rich would also benefit from a lowering of the tax on so–called "pass through" businesses that allow them to take in income as a business. These gifts to the rich have come under fire at a time when U.S. wealth inequality is already at an all–time high: The top 1% now holds 39% of the nation's wealth.<br />
</li>
<li style="margin–left: 0.25in;"><strong>Most Americans would see a temporary tax cut.</strong> The Senate bill keeps the current seven tax brackets, but it cuts the rates at every level. This means that most Americans would get a tax cut in the coming years, but not everyone, because the bill also does away with some popular tax credits and savings. But while the big business tax cut would be permanent, the rate reductions for individuals would expire after 2025. By 2027, according to the Congressional Budget Office, everyone making <em>less </em>than $75,000 would provide a net savings to the government, whether through higher taxes, lower amounts spent on services, or both.<br />
</li>
<li style="margin–left: 0.25in;"><strong>Uninsured Americans would no longer have to purchase health insurance</strong> or else pay a penalty – a provision of Obamacare known as the "individual mandate." The Congressional Budget Office, the U.S.'s official nonpartisan estimator, has predicted that this change would cause health insurance premiums to rise by an average of about 10 percent a year, and prompt 13 million people to drop insurance by 2027.<br />
</li>
<li style="margin–left: 0.25in;"><strong>Drilling for oil and gas would be allowed</strong> in Alaska's Arctic National Wildlife Refuge. <br />
</li>
</ul><p>Under both versions of the bill, tax cuts would result in a dramatic drop in revenue for the federal government, adding $1.4 trillion to the U.S. federal deficit. Republicans argue that much of this amount would be made up for by huge economic gains resulting from the tax cuts, as both corporations and the wealthy invest in spending that would grow the economy.</p>
<p>However, past tax cuts have not resulted in a major economic boost. The nonpartisan Joint Committee on Taxation has said the current Senate tax plan will boost economic growth by only 0.8 percent over the next decade, leaving $1 trillion in cuts unpaid for.</p>
<p>A number of Republicans have already signaled how they plan to address this shortfall: By making cuts to programs that support the elderly, disabled and poor people, including Medicaid, Medicare, and Social Security. "The driver of our debt is the structure of Social Security and Medicare for future beneficiaries," noted Sen. Marco Rubio (R–Fla.) in response to questions about the $1 trillion budget gap. House Speaker Paul Ryan (R–Wis.) said that he wants Republicans to reduce spending on government programs in 2018. And Senate Finance Committee Chair Orrin Hatch (R–Utah) argued that "liberal programs" for the poor were wasting Americans' money. </p>
<h4><br />
What happens next?</h4>
<p>To pass the law, the Senate and House must approve identical legislation, so the leadership of each house must appoint members to a special joint committee, which will work out the differences. The Democrats have appointed their members and the Republicans, theirs. The number of committee members from each party is determined by the overall majorities in each house. Because the Republicans have majorities in both the Senate and House, they have a majority in the reconciliation committee.</p>
<p>Congressional leaders have said they hope that this special conference committee will come up with a tax cut plan that both houses of Congress can pass and send to President Trump to sign by the end of the 2017.</p>
<p>Here are some of the issues that the reconciliation committee will have to <a href="https://www.nytimes.com/interactive/2017/12/08/us/politics/house–senate–tax–bill–comparison.html">iron out</a>:<br />
</p>
<ul><li style="margin–left: 0.25in;">The House version totally eliminates the Alternative Minimum Tax which ensures that wealthy individuals and companies can't use credits and exemptions to lower their taxes too much. (The Senate version just dilutes the AMT.)<br />
</li>
<li style="margin–left: 0.25in;">The House version of the bill would eliminate the estate tax altogether after 2023; the Senate version just exempts more families from paying it. (Only those with estates of more than $11 million would have to pay anything.)<br />
</li>
<li style="margin–left: 0.25in;">While the Senate eliminates the "individual mandate" provision of Obamacare (which ensures that everyone pays into the system so that there's enough money to care for the people with high health expenses), the House version keeps the mandate.<br />
</li>
<li style="margin–left: 0.25in;">Under the House bill, graduate students who receive a break on tuition will have to pay income tax on that tuition reduction.<br />
</li>
<li style="margin–left: 0.25in;">The House allows churches and other tax–exempt groups to engage in political activity. <br />
</li>
<li style="margin–left: 0.25in;">The House bill eliminates the $250 tax deduction for teachers who use their own money for school supplies. (The Senate actually doubles the amount to $500.)<br />
</li>
</ul><p>President Trump and Republican leaders are right about one important aspect of the tax laws: the tax code is enormously lengthy, complex, and difficult to understand. The number of adjustments (credits, deductions, exemptions, carryovers, etc.,) to income and to taxes owed is staggeringly difficult to calculate for most individuals. And even more complicated for businesses. Each of the tens of thousands of provisions in the law will help or hurt some group of taxpayers and not others.</p>
<p>The complexity of the law tends to advantage the wealthiest individuals and the largest corporations in at least two ways. First, wealthy donors and corporate lobbyists can afford (very expensive) tax lawyers to tease out every conceivable loophole which will reduce their taxes. Second, they are adept and very successful in persuading Congress to make changes that benefit them.</p>
<p>The Republican tax plans have drawn criticism and protest, particularly from those concerned about wealth inequality, public schools, healthcare, college students, low–income wage earners and the national debt. A Quinnipiac University poll shows 53% disapprove of the plan and 29% approve. 64% think the tax plan benefits the wealthy the most.</p>
<p>Though there were no large scale demonstrations to protest the Republican tax plans, there were hundreds of protests around the country. Many, from Alaska to Maine to North Carolina and Texas, targeted specific legislators.<br />
</p>
<ul><li>On Nov. 27, over 100 demonstrations and sit–ins around the country protested the Republican tax plan.<br />
</li>
<li>On Nov. 28, 36 people were arrested in the Capitol for interrupting the Senate Budget Committee meeting.<br />
</li>
<li>On Nov. 29, graduate students at 63 schools walked out in protest of the bill.<br />
</li>
<li>On Dec. 2, New York City Mayor DeBlasio addressed hundreds of protestors in front of the New York Stock Exchange.<br />
</li>
<li>On Dec. 4, 500 protestors rallied at the Chicago Board of Trade.<br />
</li>
<li>On Dec. 5, 300 demonstrators stormed the House Office Building to take their message to individual members of Congress. <br />
</li>
<li>On Dec. 7, nine religious leaders were arrested for protest<span id="cke_bm_591E" style="display: none;"> </span>ing at Sen. Susan Collins' Portland, ME, Office.<br />
</li>
</ul><p>Much opposition energy is focused on changing control of Congress in the 2018 elections. In that year (and every two years), all members of Congress are up for election, as are about one–third of U.S. senators. If the bill passes and taxes are cut, some voters will surely reward the Republicans at the polls. But opponents are already mobilizing to challenge every Congress member who votes for a tax bill that they believe will rob the poor to pay the rich. </p>
<p> </p>
<hr /><h4> </h4>
<h4>For Discussion<br />
</h4>
<ol><li>What questions to do you have about the reading? How might they be answered?<br />
</li>
<li>Do you support the tax plans Congress has passed? Why or why not?<br />
</li>
<li>Given the huge inequality in the U.S., should tax reform aim to put more money in the hands of middle and lower income groups? Is that government's job? Why or why not?<br />
</li>
<li>While there have been many protests in Washington, D.C. and around the country, the movement against the tax bill have been less vigorous than the protests against the repeal of Obamacare. Why do you think there hasn't been a larger response?<br />
</li>
<li>Do you think the Republican tax plan will help or hurt their election chances in the 2018 elections for Congress?</li>
</ol><p> </p>
<hr /><p> </p>
<h4>Sources</h4>
<p><a href="https://www.nytimes.com/2017/12/06/business/house–senate–tax–bill–differences.html">https://www.nytimes.com/2017/12/06/business/house–senate–tax–bill–differences.html</a></p>
<p><a href="https://taxfoundation.org/important–differences–house–senate–tax–reform–bills–heading–conference/">https://taxfoundation.org/important–differences–house–senate–tax–reform–bills–heading–conference/</a></p>
<p><a href="http://thehill.com/policy/finance/363361–poll–majority–disapproves–of–gop–tax–bill">http://thehill.com/policy/finance/363361–poll–majority–disapproves–of–gop–tax–bill</a></p>
<p><a href="https://www.huffingtonpost.com/entry/protests–tax–plan–obamacare_us_5a1dc10ae4b003f9c7fb1a7a">https://www.huffingtonpost.com/entry/protests–tax–plan–obamacare_us_5a1dc10ae4b003f9c7fb1a7a</a></p>
<p><a href="http://www.cnn.com/2017/11/30/politics/grad–students–tax–walkout/index.html">http://www.cnn.com/2017/11/30/politics/grad–students–tax–walkout/index.html</a></p>
<p><a href="https://www.alternet.org/activism/not–tax–bill–declaration–war–nationwide–protests–erupt–after–gop–tax–vote">https://www.alternet.org/activism/not–tax–bill–declaration–war–nationwide–protests–erupt–after–gop–tax–vote</a></p>
<p><a href="http://www.msnbc.com/rachel–maddow/watch/judge–in–mike–flynn–case–recuses–himself–1112063043549">http://www.msnbc.com/rachel–maddow/watch/judge–in–mike–flynn–case–recuses–himself–1112063043549</a></p>
<p><a href="https://www.washingtonpost.com/news/wonk/wp/2017/11/16/senate–tax–bill–cuts–taxes–of–wealthy–and–hikes–taxes–of–families–earning–under–75000–over–a–decade/?utm_term=.948ef168419e">https://www.washingtonpost.com/news/wonk/wp/2017/11/16/senate–tax–bill–cuts–taxes–of–wealthy–and–hikes–taxes–of–families–earning–under–75000–over–a–decade/?utm_term=.948ef168419e</a></p>
<p><a href="https://www.washingtonpost.com/news/wonk/wp/2017/11/30/what–is–in–the–senates–massive–tax–bill–and–what–could–change/?utm_term=.179aeee02b9e">https://www.washingtonpost.com/news/wonk/wp/2017/11/30/what–is–in–the–senates–massive–tax–bill–and–what–could–change/?utm_term=.179aeee02b9e</a></p>
<p><a href="http://money.cnn.com/2017/11/03/news/economy/wealth–gap–america/index.html">http://money.cnn.com/2017/11/03/news/economy/wealth–gap–america/index.html</a></p>
<p><a href="https://www.forbes.com/sites/eriksherman/2017/11/27/cbo–senate–tax–bill–is–even–worse–for–low–incomes–than–before/#1d4fdf07503c">https://www.forbes.com/sites/eriksherman/2017/11/27/cbo–senate–tax–bill–is–even–worse–for–low–incomes–than–before/#1d4fdf07503c</a></p>
<p><a href="https://www.nytimes.com/interactive/2017/12/08/us/politics/house–senate–tax–bill–comparison.html">https://www.nytimes.com/interactive/2017/12/08/us/politics/house–senate–tax–bill–comparison.html</a></p>
<p> </p>
<p> </p>
<p> </p>
</div>
<span><span lang="" about="https://www.morningsidecenter.org/fionta" typeof="schema:Person" property="schema:name" datatype="" xml:lang="">fionta</span></span>
<span>December 9, 2017</span>
Sat, 09 Dec 2017 17:27:43 +0000fionta291 at https://www.morningsidecenter.orgWhy Pay Taxes? And Who Benefits from "Tax Reform"?https://www.morningsidecenter.org/teachable-moment/lessons/why-pay-taxes-and-who-benefits-tax-reform
<span>Why Pay Taxes? And Who Benefits from "Tax Reform"?</span>
<div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p> </p>
<h4>To the Teacher</h4>
<p>On November 2, 2017, Republicans in the House of Representatives unveiled a new tax reform plan. The <a href="https://waysandmeansforms.house.gov/uploadedfiles/tax_cuts_and_jobs_act_section_by_section.pdf">"Tax Cuts and Jobs Act"</a> dramatically cuts corporate tax rates and would eliminate the estate tax by 2024. The nonpartisan Tax Policy Center <a href="http://www.motherjones.com/politics/2017/09/trump–hands–80–percent–of–proposed–tax–cut–to–top–1–percent/">estimates</a> that about 80 percent of the bill’s benefits would go to the top 1 percent of Americans.</p>
<p>While tax reform is often in the news, we rarely see a discussion of what taxes do for our society as a whole. Why pay taxes at all? Beyond a legal requirement to file a tax return, taxes allow for provision of public goods for the country and its residents. Federal taxes are spent on programs such as Social Security, Medicaid and Medicare, and other safety net programs such as food assistance for low–income Americans. They also fund military, education, infrastructure, police, environmental and food protections, healthcare,... science, and research. Despite paying taxes each year, many Americans are unaware of how that tax money is spent.</p>
<p>This lesson is divided into two readings. The first reading explores what taxes do and why Americans pay them. The second reading discusses the proposed tax reform plan and how analysts are projecting it will affect the country. Questions for discussion follow each reading.</p>
<p> </p>
<hr /><h4><br />
Reading One:<br />
Why Pay Taxes?<br />
</h4>
<p>While tax reform is often in the news, we rarely see a discussion of what taxes do for our society as a whole. One might ask, "Why pay taxes at all?"</p>
<p>Beyond a legal requirement to file a tax return, taxes allow for provision of public goods for the county and its residents. Federal taxes are spent on programs such as social security, Medicaid and Medicare, and other safety net programs such as food assistance for low–income Americans. They also fund military, education, infrastructure, food and environmental protections, police, healthcare, science, research, and much more. Despite paying taxes each year, many Americans are unaware of how that tax money is spent.</p>
<p>David Cay Johnston, a veteran investigative journalist specializing in economics and taxes, wrote in the introduction to the book <em>10 Excellent Reasons Not to Hate Taxes</em> about some of the benefits taxes provide Americans: "For starters, taxes buy us freedom. They buy us civilization. They buy us prosperity. They finance America... We need a tax system designed to grease the wheels of economic growth, reward good behavior, encourage prosperity, succor the poor and give them the tools to succeed, educate new generations of Americans, and perpetuate what we have built, not just in the physical world, but in the realm of ideals."</p>
<p>Stephanie Greenwood, editor of <em>10 Excellent Reasons Not to Hate Taxes</em>, writes:</p>
<p style="margin–left:.5in;">Any thoughtful debate about taxes raises two questions: (1) What kind of society do we want? And (2) How are we going to pay for it? These questions are not neutral. They involve deeply held beliefs and zero–sum conflicts over the public resources that support the foundation of decent private lives.</p>
<p style="margin–left:.5in;">These include: a relatively stable, secure environment, legal protections and recourse for violations of fundamental rights, institutions that allow some measure of opportunity and mobility, and responsive government representation. Decisions about how to allocate these resources call up tension between individual self–interest (how do I and my family benefit?) and collective self–interest (how can we fund a system that serves our social need and remains roughly compatible with our normative ideals?)</p>
<p>While few would argue that we should pay no taxes, those on the right believe that taxes should be dramatically lowered. Many conservatives are ideologically opposed to what they call "big government" and believe that lowering taxes is the best way to check the scope of the federal government.</p>
<p>Some on the right maintain that by cutting corporate taxes, employers will have more money available to raise wages, which have been stagnated in the U.S. for many years. Some argue that providing tax cuts to the wealthy results in greater investment that leads to economic growth.</p>
<p>However, evidence of a connection between tax cuts and economic growth is not strong, as <a href="https://www.washingtonpost.com/news/posteverything/wp/2017/09/28/i–helped–create–the–gop–tax–myth–trump–is–wrong–tax–cuts–dont–equal–growth/?utm_term=.bfc2760ea666">Bruce Bartlett</a>, a domestic policy adviser to President Ronald Reagan, a conservative Republican, argues: "Today, Republicans extol the virtues of lowering marginal tax rates, citing as their model the Tax Reform Act of 1986, which lowered the top individual income tax rate to just 28 percent from 50 percent, and the corporate tax rate to 34 percent from 46 percent. What follows, they say, would be an economic boon...But there is no evidence showing a boost in growth from the 1986 act...Strenuous efforts by economists to find any growth effect from the 1986 act have failed to find much."</p>
<p>Although politicians who rail against taxes would have you believe that Americans are overtaxed, in comparison to other similar countries, the United States has a particularly low tax rate. A 2014 study by the Federal Reserve Bank of Chicago found that the U.S. has a tax burden—a measurement that includes income, property, and other taxes—of 25%, as compared to an average of 34% among the developed countries in the OECD (Organization for Economic Cooperation and Development). In fact, the U.S. ranks 32nd out of 35 OECD countries in terms of overall tax burden. In many other countries with higher tax rates, the revenue from taxes funds generous parental leave, universal early child care, pension programs, free education through university, and comprehensive healthcare, forming a robust public safety net.</p>
<p>Taxes touch many Americans personally when they are required to pay them, but they also have enormous influence on how many receive basic social services, education, and how research is funded. While funding many goods and services that touch our lives, they also operate on a societal level, requiring all of us to engage in the question of what, exactly, is the best use of our collective money.<br />
</p>
<h4>For Discussion</h4>
<ol><li>How much of the material in this reading was new to you, and how much was already familiar? Do you have any questions about what you read?<br />
</li>
<li>Beyond legal obligation, what is the argument for why we should pay taxes? Which reasons stand out to you as particularly important?<br />
</li>
<li>Were you surprised to read that, in comparison to other countries with similar economies, Americans as a whole, have a relatively low tax burden? If debates about taxes are often about values, what do you think a low tax burden might say about our values?<br />
</li>
<li>If you could change something about taxes in America, what would you change? Why?<br />
</li>
<li>Some taxpayers object to the fact that a large percentage of federal spending goes to the military and supports foreign interventions such as the wars in Iraq and Afghanistan. Some "tax resisters" refuse to pay all or part of their federal taxes for this reason. What do you think of their stance? Why?<br />
</li>
<li>Other taxpayers object to paying for healthcare and support for the elderly and disabled. What do you think? Why?</li>
</ol><p> </p>
<hr /><h4><br /><br />
Reading Two:<br />
The Republicans’ Tax Plan<br />
</h4>
<p>Since early in his campaign, then–candidate Donald Trump has promised to reform taxes in the United States. In September 2015, he told CBS News, "We’re going to be reducing taxes for the middle class." When President Trump unveiled his new tax reform framework on September 28, 2017, he claiming that "It's not good for me, believe me," in an effort to emphasize that his new tax structure will not benefit the rich.</p>
<p>On November 2, 2017, Republicans in the House of Representatives unveiled a new tax reform plan that is mostly aligned with the Trump framework. The 429–page <a href="https://waysandmeansforms.house.gov/uploadedfiles/tax_cuts_and_jobs_act_section_by_section.pdf">"Tax Cuts and Jobs Act"</a> dramatically cuts corporate tax rates and would eliminate the estate tax by 2024, allowing wealthy families to pass on their estates and trust funds to their heirs tax–free. Those cuts will be paid for by $1.5 trillion of deficit–spending over the next 10 years.</p>
<p>The nonpartisan Tax Policy Center <a href="http://www.motherjones.com/politics/2017/09/trump–hands–80–percent–of–proposed–tax–cut–to–top–1–percent/">estimates</a> that about 80 percent of the bill’s benefits would go to the top 1 percent of Americans. According to the Center, the plan would cut middle–class families’ tax bills by $660 next year, while the top 0.1 percent of Americans would receive a tax cut of $722,000. Republican defenders of the bill say that the <em>average</em> family would get a $1,182 tax cut.</p>
<p>The current tax code in the United States is what is known as a progressive tax system, meaning that taxpayers contribute taxes based on their ability to pay. Higher income earners pay a larger percentage of their income in taxes than lower earners do. The federal government uses tax brackets––a range of incomes used to determine a tax rate––to assign different levels of income earners to different tax rates.</p>
<p>In a September 27, 2017 article in the <em>New York Times</em>, Washington correspondent Binyamin Appelbaum <a href="https://www.nytimes.com/2017/09/27/us/politics/trump–tax–plan–wealthy–middle–class–poor.html">described</a> how President Trump’s tax plan would affect Americans across various income levels:</p>
<p style="margin–left:.5in;">The tax plan that the Trump administration outlined on Wednesday is a potentially huge windfall for the wealthiest Americans. It would not directly benefit the bottom third of the population. As for the middle class, the benefits appear to be modest.</p>
<p style="margin–left:.5in;">The administration and its congressional allies are proposing to sharply reduce taxation of business income, primarily benefiting the small share of the population that owns the vast majority of corporate equity. President Trump said on Wednesday that the cuts would increase investment and spur growth, creating broader prosperity. But experts say the upside is limited, not least because the economy is already expanding.</p>
<p style="margin–left:.5in;">The plan would also benefit Mr. Trump and other affluent Americans by eliminating the estate tax, which affects just a few thousand uber–wealthy families each year, and the alternative minimum tax, a safety net designed to prevent tax avoidance.</p>
<p style="margin–left:.5in;">The precise impact on Mr. Trump cannot be ascertained because the president refuses to release his tax returns, but the few snippets of returns that have become public show one thing clearly: The alternative minimum tax has been unkind to Mr. Trump. In 2005, it forced him to pay $31 million in additional taxes.<br />
</p>
<p>Controversially, the tax plan also eliminates many deductions that exempt taxation on income used to pay certain expenses like those for student loans, medical bills, and electrical vehicle purchases, and it reduces the amounts that can be deducted for financing the purchase of homes.</p>
<p>Overall, the Republican tax plan looks like it would do three things. First, it appears that it would make our tax code less progressive, meaning that instead of asking the very wealthy to pay a greater share, it provides important reductions in what they would have to pay. Second, it would bring less overall revenue to government, which might push the government to cut services in some areas. And third, it would also dramatically increase debt and the additional cost of paying for that increased debt.<br />
</p>
<h4>For Discussion</h4>
<ol><li>How much of the material in this reading was new to you, and how much was already familiar? Do you have any questions about what you read?<br />
</li>
<li>What is meant by "progressive taxation"? What makes the U.S. tax code "progressive"? How would taxes be changed to become more or less progressive?<br />
</li>
<li>What are some of the changes Republicans are proposing to make to the U.S. tax code? What might be some of the costs or benefits of these proposals?<br />
</li>
<li>President Trump has argued that his new tax code will ease a burden on middle–income earners. Based on the reading above or anything else you have read, do you think that argument is accurate? Why, or why not?</li>
</ol><p> </p>
<p><em>–– Research assistance provided by Ryan Leitner</em></p>
</div>
<span><span lang="" about="https://www.morningsidecenter.org/fionta" typeof="schema:Person" property="schema:name" datatype="" xml:lang="">fionta</span></span>
<span>November 4, 2017</span>
Sat, 04 Nov 2017 16:35:02 +0000fionta294 at https://www.morningsidecenter.orgTax Reform & Wealth Inequalityhttps://www.morningsidecenter.org/teachable-moment/lessons/tax-reform-wealth-inequality
<span>Tax Reform & Wealth Inequality</span>
<div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><h4>Student Reading<br />
Tax Reform & Wealth Inequality </h4>
<p><br />
In the coming weeks or months, President Trump and Congressional Republicans hope to push through a major tax reform bill that would dramatically cut taxes, especially for corporations and the wealthy, reducing funds that would be available for programs that support middle– and low–income Americans. </p>
<p>Taxes pay for nearly all government services, from parks and schools to armies and the FBI. When taxes are cut, budgets for things like healthcare, education, and environmental protection are slashed – or else the nation must go into deeper debt (and pay a higher percentage of its tax revenue in interest).</p>
<p>Who pays how much in taxes is a constant tug–of–war in Congress and legislatures around the country. With so much money at stake, you can understand why thousands of organizations and corporate lobbyists work full time trying to influence tax laws.</p>
<p>On November 2, 2017, Republicans in the House of Representatives unveiled a new tax reform plan. The 429–page <a href="https://waysandmeansforms.house.gov/uploadedfiles/tax_cuts_and_jobs_act_section_by_section.pdf">"Tax Cuts and Jobs Act"</a> dramatically cuts corporate tax rates and would eliminate the estate tax by 2024, allowing wealthy families to pass on their estates and trust funds to their heirs tax–free. Those cuts will be paid for by $1.5 trillion of deficit–spending over the next 10 years. "With this plan, we are making pro–growth reforms, so that yes, America can compete with the rest of the world," said House Speaker Paul Ryan of Wisconsin in announcing the legislation.</p>
<p>The nonpartisan Tax Policy Center <a href="http://www.motherjones.com/politics/2017/09/trump–hands–80–percent–of–proposed–tax–cut–to–top–1–percent/">estimates</a> that about 80 percent of the bill’s benefits would go to the top 1 percent of Americans. According to the Center, the plan would cut middle–class families’ tax bills by $660 next year, while the top .1 percent of Americans would receive a tax cut of $722,000. Republican defenders of the bill say that the average family would get a $1,182 tax cut. </p>
<p>Opponents of Republican tax proposals say that they will widen the already enormous gap between the rich and everyone else. </p>
<p>This divide isn’t just about how much money people actually earn – it’s about how much <em>wealth</em> people own. In other words, economic inequality isn’t just about comparing the size of the paychecks people receive. It also involves comparing how much property, stocks, bonds, and other wealth people own or inherit. (Over 60 percent of the richest 400 Americans inherited much of their wealth.) Much of this wealth continually increases in value without any labor being performed. In contrast, people with little wealth almost always have to work very hard to get it.</p>
<p>While people often complain about the tax breaks that wealthy people receive for gambling, business dinners, limousines, and yachts, the biggest tax breaks and loopholes are not as easily understood without an MBA or law degree.</p>
<p>For example:</p>
<ul><li>Hedge fund managers making hundreds of millions of dollars pay a 20% tax on that income (instead of 40%) because the income is called "carried interest."</li>
<li>As long as assets (like stocks) are not sold, they can keep increasing in value without being taxable. But these assets can be used to get loans to buy more market investments.</li>
<li>Wealthy families set up "charities" which include among their expenses, salaries to their children and other financial benefits.</li>
<li>Corporate money is often stored in "tax havens." Over 20 trillion dollars worldwide is kept in tax–free (or tax–negligible) countries like the Cayman Islands.</li>
</ul><p>By all measures, the wealthiest Americans have been increasing their own assets at a far greater rate than those lower down on the economic ladder. While there are other economic forces that affect wealth inequality, the way we are taxed and the rates of taxation we pay can increase inequality or reduce it.</p>
<p> </p>
<hr /><p> </p>
<h4>Quiz: Test your wealth knowledge</h4>
<p><br /><strong>1. </strong>Forbes Magazine publishes an annual list of the wealthiest 400 Americans. In 1982 the average wealth of the 400 was $230 million dollars. Guess how much the average was in 2016?</p>
<p>a) Almost exactly the same: $230.8 million dollars</p>
<p>b) $6 billion dollars</p>
<p>c) $165 million dollars</p>
<p>d) $9.8 gazillion dollars</p>
<p><br /><strong>2. </strong>True or False</p>
<p>The net worth (what you have minus what you owe) of the bottom 60% of the country decreased from 2001 to 2011, the most recent year available.</p>
<p><br /><strong>3.</strong> True or False</p>
<p>While the top tax rate for income from jobs is around 40%, money earned on the stock market (called capital gains) is taxed at a maximum of 20%.</p>
<p><br /><strong>4.</strong> In 2013, the top 20% wealthiest Americans owned what percentage of stocks?</p>
<p>a) 22%</p>
<p>b) 49%</p>
<p>c) 61%</p>
<p>d) 85%</p>
<p>e) 91%</p>
<p><br /><strong>5. </strong>Which of the following receive tax breaks from the IRS?</p>
<p>a) second homes</p>
<p>b) yachts with beds</p>
<p>c) companies that ship jobs overseas</p>
<p>d) corporate jets</p>
<p>e) unemployment benefits</p>
<p><br /><strong>6.</strong> True or False</p>
<p>Billionaire investor Warren Buffett pays a lower rate of income tax than his office staff.</p>
<p><br /><strong>7. </strong>What is the median wealth for white households in the U.S.? (Median means that half of the people have more, and half have less.) In a typical household, this might mean the amount the family has already paid toward their house, plus the value of cars and other goods, plus savings, minus the remaining mortgage and other debts.</p>
<p>a) $12,000</p>
<p>b) $36,000</p>
<p>c) $134,000</p>
<p>d) $305,000</p>
<p>e) $1.3 million</p>
<p><br /><strong>8. </strong>What is the median wealth for black households?</p>
<p>a) $11,000</p>
<p>b) $54,000</p>
<p>c) $112,00</p>
<p>d) $254,00</p>
<p>e) $994,000</p>
<p><br /><strong>9. </strong>True or false? </p>
<p>The 400 wealthiest Americans have more wealth than half of all Americans combined</p>
<p><br /><strong>10. </strong>How does the U.S. rank (among developed nations) for income inequality?</p>
<p>a) second best</p>
<p>b) second worst</p>
<p>c) square in the middle</p>
<p> </p>
<p><strong>Answers:</strong></p>
<p>1. b </p>
<p>2. True</p>
<p>3. True</p>
<p>4. e </p>
<p>5. all except e </p>
<p>6. True</p>
<p>7. c</p>
<p>8. a</p>
<p>9. True</p>
<p>10. b</p>
<p> </p>
<hr /><h4><br />
Class Exercise</h4>
<p><br />
To get wealth out of the realm of abstract numbers, have the class perform the following exercise:</p>
<p>Divide the class into four groups. Each group will represent a different wealth grouping:</p>
<p class="rteindent1">a) low income (people without homes, people receiving government assistance, people with very low wages, etc.)</p>
<p class="rteindent1">b) moderate income ("middle class," small business owners, etc.)</p>
<p class="rteindent1">c) wealthy (CEOs, highly paid professionals, stock traders, etc.)</p>
<p class="rteindent1">d) super wealthy (1%, Forbes List)</p>
<p><br />
Have each group list what assets are likely to be found in households of each group. Examples would include homes (perhaps multiple homes), cars, boats, planes, gold, businesses, computers, bank accounts, stocks, real estate, retirement plans, collections of valuables (art, jewelry, cars) ...</p>
<p>Have each group describe to the rest of the class what assets they are likely to own.</p>
<ul><li>What differentiates their group from the group above?</li>
</ul><p> </p>
<hr /><h4><br />
Closing</h4>
<p><br />
Ask students:</p>
<ul><li>What is one fact or idea that stood out for you in this activity?</li>
<li>Did the activity make you think differently about the current tax plan – or future tax plans? Why or why not?</li>
</ul><p> </p>
<hr /><h4><br />
Sources</h4>
<p><a href="http://www.npr.org/2017/03/01/517975766/while–trump–touts–stock–market–many–americans–left–out–of–the–conversation">http://www.npr.org/2017/03/01/517975766/while–trump–touts–stock–market–many–americans–left–out–of–the–conversation</a></p>
<p><a href="http://www.bankrate.com/finance/taxes/tax–loopholes–mainly–benefit–rich–1.aspx">http://www.bankrate.com/finance/taxes/tax–loopholes–mainly–benefit–rich–1.aspx</a></p>
<p><a href="http://money.cnn.com/2013/03/04/news/economy/buffett–secretary–taxes/index.html">http://money.cnn.com/2013/03/04/news/economy/buffett–secretary–taxes/index.html</a></p>
<p><a href="https://qz.com/196369/why–buying–a–corporate–jet–pays–for–itself/">https://qz.com/196369/why–buying–a–corporate–jet–pays–for–itself/</a></p>
<p><a href="https://inequality.org/facts/wealth–inequality/">https://inequality.org/facts/wealth–inequality/</a></p>
<p><a href="https://www.washingtonpost.com/news/rampage/wp/2017/08/11/why–income–inequality–is–so–much–worse–in–the–u–s–than–in–other–rich–countries/?utm_term=.f365a83ec9d1">https://www.washingtonpost.com/news/rampage/wp/2017/08/11/why–income–inequality–is–so–much–worse–in–the–u–s–than–in–other–rich–countries/?utm_term=.f365a83ec9d1</a></p>
<p><a href="http://www.epi.org/blog/the–racial–wealth–gap–how–african–americans–have–been–shortchanged–out–of–the–materials–to–build–wealth/">http://www.epi.org/blog/the–racial–wealth–gap–how–african–americans–have–been–shortchanged–out–of–the–materials–to–build–wealth/</a></p>
<p><a href="http://www.teachingeconomics.org/content/docs/complete.pdf">http://www.teachingeconomics.org/content/docs/complete.pdf</a></p>
<p> </p>
<p> </p>
</div>
<span><span lang="" about="https://www.morningsidecenter.org/fionta" typeof="schema:Person" property="schema:name" datatype="" xml:lang="">fionta</span></span>
<span>November 1, 2017</span>
Wed, 01 Nov 2017 14:45:11 +0000fionta295 at https://www.morningsidecenter.orgTrump, Clinton & Taxeshttps://www.morningsidecenter.org/teachable-moment/lessons/trump-clinton-taxes
<span>Trump, Clinton & Taxes</span>
<div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><h3>Quiz<br />
</h3>
<p>The following quotations are from the two major party candidates for the presidency. Can you tell which ones are from Donald Trump and which are from Hillary Clinton?</p>
<ol><li>"Imagine your paycheck was 40 percent higher than it currently is. What could you do with 40 percent more wealth?<br />
</li>
<li>"I am proposing an across-the-board income tax reduction--especially for middle income Americans."<br />
</li>
<li>"Right now, the wealthy pay too little and the middle class pays too much."<br />
</li>
<li>"The rich will pay their fair share."<br />
</li>
<li>It’s outrageous that multi-millionaires and billionaires are allowed to play by a different set of rules than hardworking families, especially when it comes to paying their fair share of taxes."<br />
</li>
<li>"I want to make sure the wealthy pay their fair share, which they have not been doing. I want the Buffett Rule to be in effect, where millionaires have to pay 30 percent tax rates instead of 10 percent to nothing in some cases."<br />
</li>
<li>"There will be people in the very upper echelons that won't be thrilled with this because we're taking away their deductions."<br />
</li>
<li>"Hardworking middle class families need a raise—not a tax increase."</li>
</ol><p> </p>
<p><em>Answers:</em></p>
<p>Trump: 1,2,4,7 <br />
Clinton: 3,5,6,8</p>
<p> </p>
<hr /><h3>The candidates' plans</h3>
<p>Discuss with students some of the tax proposals advanced by Hillary Clinton and Donald Trump. (Also see <a href="http://www.morningsidecenter.org/teachable-moment/lessons/taxes-where-do-presidential-candidates-stand">this lesson</a>.) </p>
<p><strong>Hillary Clinton</strong> has proposed increasing taxes on the wealthy and large corporations to pay for investments (such as helping students pay for college tuition). Her proposals include:</p>
<ul><li>a 4% surcharge on incomes over $5 million</li>
<li>ensuring that the wealthiest pay at least a 30% income tax</li>
<li>closing tax loopholes that reward companies for shifting profits and jobs overseas</li>
<li>limiting the ability of Wall Street money managers to count their income as "capital gains," which are taxed at a much lower rate</li>
<li>providing tax relief for people who pay high health care costs or care for an ill or elderly family member</li>
</ul><p><strong>Donald Trump</strong> proposes to cut taxes for everyone. Wealthy people would see the largest cuts. While the average tax cut would be $5,100, those making over $3.7 million per year would see their taxes decrease by $1.3 million. Individuals earning $25,000 or less (couples, $50,000) would pay no taxes. </p>
<p>Trump’s plan also includes:</p>
<ul><li>reducing the corporate tax rate from 35% to 15%</li>
<li>closing some tax loopholes</li>
<li>eliminating taxpayers' ability to claim deductions for each of their children as well as a "head of household" provision that lowers tax bills for many single parents</li>
<li>providing a childcare tax credit <br />
</li>
</ul><hr /><p> </p>
<h3>Student Reading<br />
</h3>
<p>Taxes have been a recurring theme in the 2016 presidential campaign. Because wages have largely remained flat (or sometimes even fallen) over the last 50 years, many Americans have looked to tax cuts to help them get by. And politicians have been more than willing to promise tax reductions to get votes. Because nine out of ten Americans identify themselves as "middle class," Clinton and Trump and most other politicians are anxious to aim their statements on taxes at that group of voters.</p>
<p>Taxes are a political issue. Congress makes changes to the tax law each and every year. Every tax provision and every change benefits (or hurts) some taxpayers more than others. Since wealth inequality has become a major national issue, taxes too are being examined as a vehicle to either increase or decrease the enormous (and growing) gap between the super wealthy and the rest of the population. Democratic presidential candidate Bernie Sanders named specific taxes on the wealthy to make college free and to pay for national health insurance.</p>
<p>Let's take a little look at taxes and especially the taxes for those at the top of the economic ladder.</p>
<p>The tax system is enormously complicated. (See <a href="http://teachablemoment.org/teachablemoment.org/high/taxes.">this lesson</a> on taxes for more.) People pay property taxes, payroll taxes, excise taxes, user fees, and sales taxes, as well as income taxes at the federal, state and local levels.</p>
<p>For most of us, the federal income tax is the largest tax we pay. Officially, the federal income tax is progressive (or graduated) so that those earning the most pay the largest percentage of their income in taxes. The highest rates and the lowest rates, and the tax "brackets" in between have fluctuated since the tax was made permanent in 1913. From 1940 to the 1960s the highest official tax rate was between 80% and 94%. From the 1960s to 1980 the highest rate was around 70%. Since the 1990s the highest tax rate an individual pays has been between 30% and 40%.</p>
<p>The highest tax rate for any income group is just that <span style="font-size: 9pt; font-family: Arial, sans-serif; background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial;">- </span>the <em>highest </em>rate. The tax code provides a huge number of credits and exemptions that allow people to reduce their taxes. Those in the lowest income bracket often pay no federal income tax at all. Middle-class taxpayers can usually reduce their taxable income if they:</p>
<ul><li>support a child or parent</li>
<li>pay a mortgage on a house</li>
<li>have very high medical expenses</li>
<li>give to charities</li>
<li>pay college tuition</li>
</ul><p>In addition, there are tax <em>credits</em> which directly reduce one's taxes. Those in the middle class can take credits for:</p>
<ul><li>paying college tuition</li>
<li>child care</li>
<li>paying into retirement funds</li>
</ul><p><br />
"You know, I made $46 million last year. It was a bad year for me. But I can still afford to pay more than my secretary, who has a higher tax rate than I do."<br /><span style="font-size: 9pt; font-family: Arial, sans-serif;">-</span>Warren Buffett (the third richest person on the planet according to Forbes Magazine)</p>
<p>Some tax rules help the wealthy disproportionately. The capital gains tax is one example. Income from investing in the stock market is taxed at 15-20%, while income from actually working is taxed at rates up to 40%. About 80% of stocks are owned by the wealthiest 10% of Americans and half of Americans own no stock at all. According to the non-profit group Citizens for Tax Justice, if capital gains were taxed as ordinary income, the U.S. Treasury would gain over $500 billion over the course of a decade.</p>
<p>The New York Times recently revealed that Donald Trump claimed business losses of 915 <em>million</em> dollars in 1995. The tax law allows him to spread out that loss, allowing a billionaire such as Trump to pay no taxes at all for 18 years.</p>
<p>Here are other ways wealthy people reduce their tax payments:</p>
<ul><li>the deduction for house mortgages can be used for mortgages up to a million dollars for not just for one home but a second home as well. (And for your yacht, if it has sleeping quarters...)</li>
<li>the use of family "trusts" to avoid gift taxes and estate taxes</li>
<li>storing money abroad in tax havens</li>
<li>the ability to manipulate income to maximize lower-taxed compensation (dividends, stock options, etc.) and minimize income taxed at the higher rates</li>
<li>the ability to max out on allowable retirement savings</li>
<li>special provisions for financial managers (e.g. hedge fund managers) which allow their salaries to be considered (lower-taxed) capital gains</li>
<li>setting up a foundation that then pays a salary to the donor or a member of the family</li>
<li>using a company expense account for fine dining, company car, apartment or private jet. No taxes are paid by the person receiving these services or the business providing them.</li>
</ul><p>The tax code is over 74,000 pages long. It is full of loopholes and hidden special-interest provisions. With so much money at stake, you can understand why corporations and the very wealthy hire very expensive lawyers to maximize their tax savings.<br />
</p>
<hr /><p> </p>
<h3>For Discussion</h3>
<ol><li>The top 1% pay about 45% of all federal income tax (about 27% of all federal taxes). Is it fair to require them to pay more in taxes?<br />
</li>
<li>Republican candidates often advocate simplifying the tax code: one flat tax, pay taxes on a postcard, abolish the IRS, etc. Would these proposals make the tax system any fairer?<br />
</li>
<li>When all candidates say they want to help the middle class and the tax proposals are so complicated, how does one evaluate the parties' positions? (News publications/websites? Other media? Thinktanks? Google?...)<br />
</li>
<li>In 2012, candidate Mitt Romney (a multimillionaire) attracted attention when he disclosed that he paid only 14% in income taxes. Donald Trump says he pays the lowest taxes he can because he's "smart." Is it ethical for the super wealthy to take advantage of every tax loophole they can?<br />
</li>
<li>Some countries attempt to slow the concentration of wealth by taxing the wealth itself (instead of just income). Do you agree with this approach?<br /><br />
</li>
</ol><hr /><h3><br />
Sources</h3>
<p><a href="http://www.taxpolicycenter.org/taxvox/latest-trump-tax-plan-adds-trillions-national-debt-clinton-plan-trims-deficits-taxing-wealthy">http://www.taxpolicycenter.org/taxvox/latest-trump-tax-plan-adds-trillions-national-debt-clinton-plan-trims-deficits-taxing-wealthy</a></p>
<p><a href="http://www.ontheissues.org/celeb/Hillary_Clinton_Tax_Reform.htm">http://www.ontheissues.org/celeb/Hillary_Clinton_Tax_Reform.htm</a></p>
<p><a href="http://www.cnbc.com/2014/09/08/the-stock-gap-american-stock-holdings-at-18-year-low.html">http://www.cnbc.com/2014/09/08/the-stock-gap-american-stock-holdings-at-18-year-low.html</a></p>
<p><a href="http://www.ctj.org/taxjusticedigest/archive/federal_tax_issues/private_equity/">http://www.ctj.org/taxjusticedigest/archive/federal_tax_issues/private_equity/</a></p>
<p><a href="http://ctj.org/ctjreports/2012/03/policy_options_to_raise_revenue.php">http://ctj.org/ctjreports/2012/03/policy_options_to_raise_revenue.php</a></p>
<p><a href="http://www.forbes.com/billionaires/">http://www.forbes.com/billionaires/</a></p>
<p><a href="http://www.americansfortaxfairness.org/tax-fairness-briefing-booklet/fact-sheet-taxing-wealthy-americans/">http://www.americansfortaxfairness.org/tax-fairness-briefing-booklet/fact-sheet-taxing-wealthy-americans/</a></p>
<p><a href="http://www.bankrate.com/finance/taxes/tax-loopholes-mainly-benefit-rich-2.aspx">http://www.bankrate.com/finance/taxes/tax-loopholes-mainly-benefit-rich-2.aspx</a></p>
<p><a href="http://www.salon.com/2013/09/19/stock_ownership_who_benefits_partner/">http://www.salon.com/2013/09/19/stock_ownership_who_benefits_partner/</a></p>
<p><a href="http://www.forbes.com/sites/ryanellis/2016/09/14/trump-child-care-tax-deduction-has-nothing-to-do-with-child-care/#28ec87afd90c">http://www.forbes.com/sites/ryanellis/2016/09/14/trump-child-care-tax-deduction-has-nothing-to-do-with-child-care/#28ec87afd90c</a></p>
<p> </p>
<p> </p>
</div>
<span><span lang="" about="https://www.morningsidecenter.org/fionta" typeof="schema:Person" property="schema:name" datatype="" xml:lang="">fionta</span></span>
<span>October 16, 2016</span>
Sun, 16 Oct 2016 17:10:38 +0000fionta375 at https://www.morningsidecenter.orgGlobal Shockwave: The Panama Papershttps://www.morningsidecenter.org/teachable-moment/lessons/global-shockwave-panama-papers
<span>Global Shockwave: The Panama Papers</span>
<div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><h4>Quick Quiz</h4>
<p><br /><strong>Question: </strong>Which "papers" have recently been in the news?</p>
<p><br />
1) Pickwick Papers</p>
<p>2) Pentagon Papers</p>
<p>3) Panama Papers</p>
<p>4) Federalist Papers<br />
</p>
<p><strong>Answer: </strong> 3)</p>
<p><br />
Ask volunteers to read the following out loud, or ask students to read silently.</p>
<p> </p>
<hr /><p> </p>
<h4>2.6 Terabytes of Tax Avoidance</h4>
<p><br />
Unless you were hiding a massive amount of money in a phony company, you'd have no reason to know about a Panamanian law firm called Mossack Fonseca.</p>
<p>But on April 3, 2016, that changed. On that day, a coalition of over 100 media outlets made public a project they all had been working on in secret for over a year.</p>
<p>Someone leaked or hacked an enormous number of documents from the Mossack Fonseca law firm--over 11 million documents. The documents were leaked to a German newspaper called the Suddeutsche Zeitung, which shared it with the International Consortium of Investigative Journalists. The ICIJ describes itself as "a global network of more than 190 investigative journalists in more than 65 countries who collaborate on in-depth investigative stories." </p>
<p>ICIJ helped organize hundreds of journalists from around the world to read the documents, organize them and put them in searchable form.</p>
<p>The documents revealed how Mossack Fonseca had been using a variety of shady and perhaps illegal schemes to hide hundreds of billions of dollars for its wealthy customers. This allowed thousands of very rich people to shelter vast sums of money not only from scrutiny, but from taxes that could have been used to fund human needs in countries around the world.</p>
<p>As massive as the leak is, the tax avoidance revealed in the Panama Papers represents the tip of an iceberg. Mossack Fonseca is only one of many companies that serve to shelter money for the wealthy and corporations. And Panama is just one of the countries that serve as a tax haven. The UK-based <a href="http://www.taxjustice.net/" target="_blank">Tax Justice Network</a> estimates there are over 80 tax havens in the world, hiding somewhere between $21 trillion and $32 trillion. The annual economic output of all the world’s countries combined comes to about $62 trillion.</p>
<p>Mossack Fonseca’s customers include politicians, their relatives and associates from more than forty countries. In just one week, we've seen a blizzard of news stories highlighting some of the individuals named in the leaked papers. Here is a sampling of headlines from around the world:</p>
<ul><li>India's Rich and Famous Named in Panama Papers (Forbes)</li>
<li>'Panama Papers’ company set up 1000+ businesses in USA (rt.com)</li>
<li>Panama papers: Mossack Fonseca offices in El Salvador raided (BBC)</li>
<li>American executives' names surface in Panama Papers (USA Today)</li>
<li>Swiss police raid UEFA as Panama Papers scandal spreads (Reuters)</li>
<li>Panama Papers: British Banker Helped North Korea Sell Arms, Expand Nuclear Program (Newsweek)</li>
<li>Panama Papers open new chapter in Argentina corruption drama (Financial Times)</li>
<li>Heads roll in European banks, protests in Paris after Panama Papers leak (Toronto Star)</li>
<li>Panama Papers Tie More of China’s Elite to Secret Accounts (NY Times)</li>
<li>Iceland PM steps aside after protests over Panama Papers revelations (Guardian)</li>
<li>Panama Papers: David Cameron embroiled in tax avoidance row after details of father's Bahamas business interests are leaked (Telegraph)</li>
<li>Panama Papers show Syria regime circumvented sanctions (The National)</li>
<li>Panama Papers: How family that runs Azerbaijan built an empire of hidden wealth (Irish Times)</li>
<li>Panama Papers: Hundreds of Israeli Companies, Shareholders Listed in Leaked Documents Detailing Offshore Holdings (Haaretz)</li>
</ul><p><br />
The thousands of stories in media around the world have resulted in numerous investigations, the fall of Iceland's leader, promises of indictments, frantic denials and an unmeasurable amount of embarrassment.</p>
<h4><br />
How Does It Work?</h4>
<p><br />
Mossack Fonseca and many other companies like it, specialize in hiding money. The reasons for hiding vast fortunes can include:</p>
<ul><li>to avoid paying taxes</li>
<li>to enable leaders to profit from their political positions without getting caught</li>
<li>to launder money from criminal activities like selling drugs</li>
<li>to avoid international sanctions (for example, trading with Syria or Iran)</li>
</ul><p><br />
What the law firms do is create fake ("shell") companies with fake directors to own the money. The money is held in banks and investment firms in "tax havens" like Panama that collect no taxes, have big tax loopholes, and/or have little regulation and oversight. Mossack Fonseca alone created over 200,000 such shell companies.</p>
<p>Mossack claims that their work is entirely legal. In one of the leaked documents, one of the firm's partners says: "Ninety-five per cent of our work coincidentally consists in selling vehicles to avoid taxes." (A "vehicle," in this context, is not a car, but a financial strategy or entity.) In many cases tax "avoidance" is legal, but tax evasion is not.</p>
<p>But legalities aside, citizens around the world have expressed outrage that the wealthiest among them are finding ways to avoid paying taxes that could be used to reduce poverty and help pay for schools, hospitals, libraries, and other needs in their countries. The Panama Papers shine a light on one way that the most affluent people in the world have managed to increase their share of wealth, widening the gap between rich and poor.</p>
<p>"The victims are ordinary people, like you and I," John Christensen, director and co-founder of the U.K.-based Tax Justice Network told Newsweek. "It goes back to the simple rule of law—if the rich and powerful pay less tax, then the rest of us end up paying more." </p>
<p>The impact of tax dodging is perhaps greatest in poor countries. A spokesman at Oxfam notes that "As much as 30 per cent of all African financial wealth is estimated to be held offshore in tax havens, costing an estimated $14 billion in lost tax revenues every year. This is enough money to pay for healthcare for mothers and children that could save four million children's lives a year and employ enough teachers to get every African child into school."</p>
<h4><br />
What about the U.S.?</h4>
<p><br />
Most of the headlines have highlighted Mossack's big-name clients in other countries. Why aren't there more from the US—which has more than its share of super-wealthy people? The answer might surprise you.</p>
<p>The United States is itself a tax haven country. "If a company in the U.S. can do the exact thing for you as this company in Panama, then you might as well do it right here in the U.S. And its perfectly legal, which is the issue," said Ana Owens from the advocacy group Public Interest Research Group (PIRG).</p>
<p>According to the Tax Justice Network, the United States ranks third in the world as a haven to avoid taxation. TheStreet (a financial media company) cites the U.S.’s many tax loopholes, lack of disclosure regulations, and the ability of individual states to set their own low standards to attract more banks. Only Switzerland and Hong Kong are easier places to hide money.</p>
<p> </p>
<hr /><p> </p>
<h4>Discussion<br />
</h4>
<p>Read the following anecdote told by John Bogle, an investment fund founder who was named by Fortune Magazine as one of the investment industry's "Four Giants of the Twentieth Century."</p>
<p class="rteindent1"> At a party given by a billionaire on Shelter Island, the late Kurt Vonnegut informs his pal, the author Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch 22 over its whole history. Heller responds, "Yes, but I have something he will never have . . . Enough."</p>
<p><br />
Discuss:</p>
<ol><li>Why do the super-wealthy avoid (or evade) taxes?<br />
</li>
<li>Heller seems to imply that there's something in the psychological make-up of billionaires that drives them to accumulate ever more wealth. What do you think? If you agree, does that argue for stricter regulations to ensure that everyone pays their share of taxes?<br />
</li>
<li>Some millionaires become philanthropists and give huge amounts of money to charities. Is this comparable to paying taxes? What is the difference between donating your money and paying taxes?<br />
</li>
<li>In what ways could the injustices revealed in the Panama Papers be addressed? <br />
</li>
<li>Wealth inequality has become a national issue, including in the 2016 presidential race. Are you optimistic or pessimistic about the chances of meaningful changes to reduce the ever-widening gap? What do you think it would take?<br />
</li>
<li>Wikileaks and Eric Snowden have revealed massive amounts of leaked information to the public. This leak is many times larger. Do you think leakers should be punished? If you think it depends on the circumstances, what circumstances warrant punishment, and what circumstances don’t?</li>
</ol><p> </p>
<hr /><p> </p>
<h4>Sources</h4>
<p><br /><a href="http://panamapapers.sueddeutsche.de/en/">http://panamapapers.sueddeutsche.de/en/</a></p>
<p><a href="http://www.financialsecrecyindex.com/">http://www.financialsecrecyindex.com/</a></p>
<p><a href="http://www.thestreet.com/story/13518601/1/10-biggest-tax-havens-in-the-world-going-beyond-the-panama-papers.html">http://www.thestreet.com/story/13518601/1/10-biggest-tax-havens-in-the-world-going-beyond-the-panama-papers.html</a></p>
<p><a href="http://time.com/4280302/panama-papers-leak-vladimir-putin-mossack-fonseca/">http://time.com/4280302/panama-papers-leak-vladimir-putin-mossack-fonseca/</a></p>
<p><a href="http://www.theguardian.com/news/2016/apr/08/fallout-from-panama-papers-revelations-so-far-country-by-country">http://www.theguardian.com/news/2016/apr/08/fallout-from-panama-papers-revelations-so-far-country-by-country</a></p>
<p><a href="http://www.alternet.org/economy/lessons-panama-papers-yes-rich-are-different-us-they-stole-our-money?akid=14153.292806.fw6ABD&rd=1&src=newsletter1054253&t=6">http://www.alternet.org/economy/lessons-panama-papers-yes-rich-are-different-us-they-stole-our-money?akid=14153.292806.fw6ABD&rd=1&src=newsletter1054253&t=6</a></p>
<p><a href="http://www.theatlantic.com/international/archive/2016/04/panama-papers-mossack-fonseca/476727/">http://www.theatlantic.com/international/archive/2016/04/panama-papers-mossack-fonseca/476727/</a></p>
<p><a href="http://www.investopedia.com/articles/wealth-management/040616/panama-papers-tip-iceberg-congress-aids-tax-cheats-terrorists.asp">http://www.investopedia.com/articles/wealth-management/040616/panama-papers-tip-iceberg-congress-aids-tax-cheats-terrorists.asp</a></p>
<p><a href="http://www.theatlantic.com/international/archive/2016/04/panama-papers-names/476688/">http://www.theatlantic.com/international/archive/2016/04/panama-papers-names/476688/</a></p>
<p><a href="https://www.vanguard.com/bogle_site/sp20070518.htm">https://www.vanguard.com/bogle_site/sp20070518.htm</a></p>
<p><a href="http://www.theguardian.com/news/2016/apr/03/what-you-need-to-know-about-the-panama-papers">http://www.theguardian.com/news/2016/apr/03/what-you-need-to-know-about-the-panama-papers</a></p>
<p><a href="http://www.newsweek.com/panama-papers-who-are-real-victims-tax-avoidance-and-evasion-444144">http://www.newsweek.com/panama-papers-who-are-real-victims-tax-avoidance-and-evasion-444144</a></p>
<p><a href="http://www.nbcnews.com/storyline/panama-papers/why-are-americans-not-included-panama-papers-n551081">http://www.nbcnews.com/storyline/panama-papers/why-are-americans-not-included-panama-papers-n551081</a></p>
<p> </p>
</div>
<span><span lang="" about="https://www.morningsidecenter.org/fionta" typeof="schema:Person" property="schema:name" datatype="" xml:lang="">fionta</span></span>
<span>April 10, 2016</span>
Sun, 10 Apr 2016 14:21:52 +0000fionta402 at https://www.morningsidecenter.orgTaxes: Where Do the Presidential Candidates Stand?https://www.morningsidecenter.org/teachable-moment/lessons/taxes-where-do-presidential-candidates-stand
<span>Taxes: Where Do the Presidential Candidates Stand?</span>
<div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p> </p>
<p>Taxes are a central issue in the 2016 presidential campaign. In fact, taxation almost always is an important issue in national elections because:</p>
<p><br />
a) Taxation is one big way that we (through our government) divide up the country’s wealth.</p>
<p>b) Taxes pay for all the services we depend on, including schools, healthcare, public transportation, libraries, clean air and water, job programs, housing and food for the needy, support for the elderly and disabled, police and fire protection, etc. They also pay for infrastructure (roads, bridges, water supply, etc.), and for the U.S. military program.</p>
<p>c) Nobody likes to pay taxes.</p>
<p><br />
Taxes are hard to understand sometimes. The tax formulas are sometimes complex and the vocabulary is often unfamiliar. Politicians have been known to be less than clear in explaining their tax plans so that they can avoid alienating voters—especially those who are disadvantaged by those plans. </p>
<div>Ask students to read the following guide to tax terminology. </div>
<div> </div>
<div> </div>
<hr /><h4><br />
Tax Terminology</h4>
<p><br />
Here are some of the common terms that the candidates use to describe their tax proposals.</p>
<p><br /><strong>Income taxes.</strong> Individuals pay income taxes as a percentage of their wages, investments, money from retirement accounts and other sources. Under our current income tax system, people with higher incomes usually pay a higher percentage of their income in taxes than those with lower incomes. (The top federal income tax rate, for those earning over $415,000 per year, is 39.6%; the bottom rate, for those earning under $9,275, is 10%.) This is called a "progressive" rather than "regressive" tax policy. </p>
<p><br /><strong>Flat tax.</strong> This means that everyone pays the same tax rate, whether you are a corporate CEO or a bus driver. </p>
<p><br /><strong>Capital gains.</strong> When you invest money (in the stock market, for example) the money you make when the stock is sold is taxed. Much of the income gained by the wealthiest Americans each year is considered "capital gains." The top tax on long-term capital gains is much lower than the top income tax rate (20% vs. 39.6%).</p>
<p><br /><strong>Payroll tax.</strong> These taxes are paid as a percentage of your paycheck (usually half is paid by the employer and half by the employee). This includes our contributions to Social Security (the U.S.’s retirement system) and to Medicare, which provides healthcare for the elderly and disabled.</p>
<p><br /><strong>Consumption tax.</strong> Rather than being taxed on how much they earn, people (and corporations) are taxed on how much they spend. Though we are all familiar with the state sales tax we pay when we buy a new toaster, people have proposed many other kinds of consumption taxes. Since wealthy and low- income people are generally subject to the same consumption taxes, they tend to be regressive. Some consumption taxes are called "sin taxes" because they are intended to discourage an unhealthy behavior - like the high taxes people pay to buy cigarettes.</p>
<p><br /><strong>Value Added Tax (VAT).</strong> The VAT is similar to a sales tax, except it is paid in stages. Every time value is added to a product (eg, it is further refined or processed), that added value is taxed.</p>
<p><br /><strong>Corporate income tax.</strong> Corporate taxes are even more complicated than individual taxes, but candidates often offer a specific maximum rate. The maximum is seldom reached because industry lobbyists are so successful in persuading legislators to insert loopholes that offset some portion of the tax.</p>
<p><br /><strong>Effective tax rate.</strong> This is the actual tax rate after a company or individual takes advantage of all deductions, credits, exemptions, etc., that lower their taxes.<br /><br />
</p>
<hr /><h4><br />
Quiz<br />
</h4>
<p>1. From the 1950s to 1963, the highest tax rate for the wealthiest couples was 91%. What is the highest rate today?</p>
<p>a) 10%</p>
<p>b) 100%</p>
<p>c) 39.6%</p>
<p>d) 70.25%</p>
<p>e) Couples do not pay income tax.</p>
<p><em>Answer: </em>c)</p>
<p> </p>
<p>2. True or False</p>
<p>Sales taxes make wealthy people pay more because they buy more.</p>
<p><em>Answer:</em> This is a trick question. People with a lot of money do pay more dollars in sales taxes (since they almost always buy more). But the taxes they pay make up a much smaller portion of their money. Lower-income people do not have much extra money to save or invest, so they pay sales taxes on virtually all their income.</p>
<p> </p>
<p>3. Who said "The hardest thing in the world to understand is the income tax"?</p>
<p>a) Marco Rubio</p>
<p>b) Bernie Sanders</p>
<p>c) Barack Obama</p>
<p>d) Joe the Plumber</p>
<p>e) Albert Einstein</p>
<p><em>Answer: </em>Albert Einstein</p>
<p> </p>
<hr /><p> </p>
<h4>Activity:<br />
Where the candidates stand</h4>
<p> </p>
<p>Divide the class into five groups and have each group sit together in one part of the room.</p>
<p>Print out the summaries of candidates’ tax proposals below, and cut the page so that each candidate is on a separate slip of paper.</p>
<p>Give one slip to each group. Then give the groups 5 minutes to read about "their" candidate’s tax proposal. Ask groups to discuss among themselves:</p>
<ul><li>What is this proposal?</li>
<li>What impact would it have? How would it affect low-income people? How would it affect the wealthy? </li>
<li>What questions do you have about it?</li>
</ul><p><br />
Reconvene the class and ask each group to read the information about their candidates’ tax plan, and to share their thoughts and questions about the proposal. </p>
<p> </p>
<hr /><h4> </h4>
<h4>SENATOR MARK RUBIO (R)</h4>
<p><br />
Sen. Rubio would replace the income tax with a consumption tax. (Some 46% of federal revenues currently come from income taxes.) Under Rubio’s plan, we could save or invest as much money as we want without being taxed, and only pay a tax on it when we spend it. His plan would retain some of the present tax credits for such items as house mortgages, college tuition and having children.</p>
<p>According to the Tax Policy Center, Rubio's plan would lower taxes for everyone (averaging $3,150). Wealthier people would see their taxes cut much more than the average. Those making $3.7 million would see a tax cut of $900,000.</p>
<p> </p>
<hr /><h4> </h4>
<h4><br />
FORMER SECRETARY OF STATE HILLARY CLINTON (D)</h4>
<h4> </h4>
<p>Hillary Clinton has suggested various changes that would raise more money from the wealthiest individuals. This would include:</p>
<ul><li style="margin-left: 0.25in;">a 4% surcharge on incomes over $5 million</li>
<li style="margin-left: 0.25in;">applying the "Buffett Rule" to ensure that the wealthiest pay at least a 30% income tax. (Warren Buffett is a billionaire who famously reported that his secretary pays a higher rate of taxes than he does.)</li>
<li style="margin-left: 0.25in;">raising capital gains taxes</li>
</ul><p> </p>
<hr /><p> </p>
<h4>DONALD TRUMP (R)<br />
</h4>
<p>Trump's plan would simply cut taxes for everyone—individuals and businesses. Like Rubio's plan, the wealthiest would receive the largest cuts. While the average tax cut would be $5,100, those making over $3.7 million per year would see their taxes decrease by $1.3 million. Individuals earning $25,000 or less (couples, $50,000) would pay no taxes. </p>
<p>Trump’s plan also reduces the corporate tax rate from 35% to 15% and closes some of the tax loopholes.</p>
<p> </p>
<hr /><p> </p>
<h4>SENATOR TED CRUZ (R)<br />
</h4>
<p>Cruz proposes to eliminate taxes on corporations, payroll taxes, and estate taxes. All individuals would pay the same rate of income tax—10% . Corporations would pay a new 16% Value Added Tax. </p>
<p>Cruz's plan would cut taxes an average of $6,100 for individuals. But those earning higher incomes would see a much bigger tax cut. Those earning over $3.7 million would get a tax cut averaging $2 million.</p>
<p> </p>
<hr /><h4><br />
SENATOR BERNIE SANDERS (D)<br />
</h4>
<p>Sen. Sanders’ plan raises taxes on the very wealthy by:</p>
<ul><li style="margin-left: 0.25in;">raising the tax rates and limiting tax deductions for all those earning $250,000 or more per year</li>
<li style="margin-left: 0.25in;">taxing capital gains at the same rate as income from work. </li>
<li style="margin-left: 0.25in;">Sanders also proposes to create a national health insurance system that would make healthcare free at the point of delivery (that is, people wouldn’t have to pay co-pays or other fees to insurance companies). It would be financed through a payroll tax of 2.2% on individuals and 6.2% on employers.</li>
</ul><p> </p>
<hr /><p> </p>
<h4>Republicans vs. Democrats<br />
</h4>
<p>Ask students what the Republican proposals have in common. Elicit or explain the following.</p>
<p>In general Republican candidates:</p>
<ul><li>favor policies that reduce overall taxes and give much higher tax breaks to those making more money.</li>
</ul><ul><li>believe in smaller government. Their tax plans reduce the federal budget by $7-9 trillion dollars over the next decade.</li>
</ul><ul><li>believe that money will "trickle down" from the wealthy to those below. The idea is that if the "job creators" are taxed less, they will be able to create more jobs—benefitting everyone. The reduced federal budget is also seen as a political benefit.</li>
</ul><p><br />
What do the Democrats’ proposals have in common? Elicit or explain the following.</p>
<p>In general Democratic candidates:</p>
<ul><li>favor increasing taxes on the wealthy<br />
</li>
<li>favor more federal spending (for infrastructure, education and healthcare, for example) and would raise taxes on the wealthy to pay for it.<br />
</li>
<li>see government as a tool to fix the economic imbalances that have produced vast inequalities in wealth and income. Both Clinton and Sanders would create jobs with large spending on infrastructure. Sanders' proposals would also establish a new national health insurance system and would provide free public higher education for all Americans.</li>
</ul><p style="margin-left: 0.25in;"><br />
</p>
<hr /><h4><br />
For Discussion<br />
</h4>
<p>1. Can taxes ever be "neutral" or does tax policy necessarily favor some portion of the population?</p>
<p>2. The gap between the wealthiest 1% of Americans and the remaining 99% has increased tremendously in the last few decades. Should tax policy be used to close the gap?</p>
<p>3. How important is a candidate's tax policy in deciding who to vote for in a presidential election (or primary)?</p>
<p> </p>
<hr /><p> </p>
<h4>Sources<br />
</h4>
<p><a href="http://www.brookings.edu/blogs/brookings-now/posts/2016/02/how-the-presidential-candidates-plan-to-tackle-tax-policy" target="_blank">http://www.brookings.edu/blogs/brookings-now/posts/2016/02/how-the-presidential-candidates-plan-to-tackle-tax-policy</a></p>
<p><a href="http://www.wsj.com/articles/ted-cruzs-tax-plan-divides-economists-1456351505" target="_blank">http://www.wsj.com/articles/ted-cruzs-tax-plan-divides-economists-1456351505</a></p>
<p><a href="https://ballotpedia.org/2016_presidential_candidates_on_taxes" target="_blank">https://ballotpedia.org/2016_presidential_candidates_on_taxes</a></p>
<p><a href="http://www.thestreet.com/story/13423067/1/which-republican-candidate-will-lower-your-tax-bill-the-most.html" target="_blank">http://www.thestreet.com/story/13423067/1/which-republican-candidate-will-lower-your-tax-bill-the-most.html</a></p>
<p><a href="http://apps.urban.org/features/tpccandidate/" target="_blank">http://apps.urban.org/features/tpccandidate/</a></p>
<p><a href="http://fivethirtyeight.com/features/no-one-can-agree-how-much-the-presidential-candidates-tax-plans-will-cost/" target="_blank">http://fivethirtyeight.com/features/no-one-can-agree-how-much-the-presidential-candidates-tax-plans-will-cost/</a></p>
<p><a href="http://graphics.wsj.com/elections/2016/candidates-tax-plans/" target="_blank">http://graphics.wsj.com/elections/2016/candidates-tax-plans/</a></p>
<p><a href="http://www.taxcreditsforworkingfamilies.org/the-2016-presidential-race-where-the-candidates-stand-on-tax-credits/" target="_blank">http://www.taxcreditsforworkingfamilies.org/the-2016-presidential-race-where-the-candidates-stand-on-tax-credits/</a></p>
<p><a href="http://theweek.com/articles/548807/hottest-tax-idea-washington-actually-terrible">http://theweek.com/articles/548807/hottest-tax-idea-washington-actually-terrible</a></p>
<p><a href="http://www.cbpp.org/research/policy-basics-where-do-federal-tax-revenues-come-from">http://www.cbpp.org/research/policy-basics-where-do-federal-tax-revenues-come-from</a></p>
</div>
<span><span lang="" about="https://www.morningsidecenter.org/fionta" typeof="schema:Person" property="schema:name" datatype="" xml:lang="">fionta</span></span>
<span>February 28, 2016</span>
Sun, 28 Feb 2016 20:25:57 +0000fionta408 at https://www.morningsidecenter.orgInequality in Americahttps://www.morningsidecenter.org/teachable-moment/lessons/inequality-america
<span>Inequality in America</span>
<div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><h4>To the Teacher:</h4>
<p>A new book by French economist Thomas Piketty has become a surprise bestseller in America this year. <em>Capital in the Twenty-First Century </em>argues that, with a few exceptions, economic inequality has increased steadily in the United States and Europe over the past two centuries.<br />
<br />
The unexpected popularity of Piketty's book has provided a new occasion to discuss economic inequality in America: Why has the gap between the wealthy and everyone else grown so dramatically? What impact does this gulf have? Is inequality necessarily a bad thing, and, if so, why?<br />
<br />
This lesson consists of two student readings and one classroom exercise focusing on the issue of economic inequality in the United States. The first reading looks at how much inequality has grown in recent decades. The second reading considers Piketty's solution of progressive taxation as a means of combating inequality, weighing arguments both in favor of and against the proposal. Questions for student discussion follow each reading.<br />
<br />
Following the two readings is a classroom exercise in quantitative literacy. It asks students to think critically about how statistical information about inequality is presented visually in charts, graphs, and other infographics.<br />
</p>
<hr /><h4><strong>Student Reading 1:</strong></h4>
<h3><strong>Inequality: The Growing Gap Between the Rich and Everyone Else</strong></h3>
<p>A new book by French economist Thomas Piketty has become a surprise bestseller in America this year. <em>Capital in the Twenty-First Century </em>argues that, with a few exceptions (including during World War 2), economic inequality has increased steadily in the United States and Europe over the past two centuries.<br />
<br />
The unexpected popularity of Piketty's book has provided a new occasion to discuss economic inequality in America: Why has the gap between the wealthy and everyone else grown so dramatically? What impact does this gulf have? Is inequality necessarily a bad thing, and, if so, why?<br />
<br />
Neil Irwin, a blogger for the <em>New York Times</em>, summed up Piketty's main argument in a May 30, 2014 <a href="http://www.nytimes.com/2014/05/31/upshot/everything-you-need-to-know-about-thomas-piketty-vs-the-financial-times.html?_r=0">post</a>:<br />
</p>
<div class="rteindent1">The book's argument in a nutshell is this: Capitalism has a natural drift toward high inequality, as assets like real estate and stocks disproportionately held by the wealthy (capital) rise faster than the economy (growth). This process was temporarily reversed by the world wars of the first half of the 20th century, but now inequality in the United States and Europe is rising back toward pre-World War I levels. This is a bad thing, which should be fought through radical policy measures like a global tax on wealth.<br />
<br />
In Capital in the Twenty-First Century, published in the United States in March (and in France last year) Mr. Piketty combined that data work with some literary criticism, philosophy, theory and prognostication for a sweeping look at the past, present and his expected future of inequality of wealth and income. It has been on the New York Times best-seller list for six weeks, including three in the No. 1 spot. This is not common for a book about economics, and this one happens to be 696 pages.<br />
</div>
<p>Piketty's analysis reinforces warnings that other observers have already made about growing inequality in the United States. The growing wealth gap was a main target of the Occupy movement that erupted across the country in late 2011. Recently, members of the United States Congress have cited inequality as a reason for why the minimum wage need to be raised.<br />
<br />
In 2011, Dave Gilson and Carolyn Perot of <a href="http://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph">MotherJones.com</a> compiled a startling set of statistics documenting the current economic landscape in the United States. Their work showed that the richest 1 percent of Americans control 34.6 percent of the wealth in the country. Meanwhile, the richest 10 percent control more than 73 percent of the nation's wealth. (For a fun and interactive way to demonstrate wealth inequality in the classroom, see this classic activity developed by <a href="http://www.teachingeconomics.org/content/docs/complete.pdf">United for a Fair Economy</a>.)<br />
<br />
In a February 19, 2014, <a href="http://www.epi.org/publication/unequal-states/">report</a> for the Economic Policy Institute, economists Estelle Sommeiller and Mark Price detailed the extent to which the wealthiest Americans have been reaping the vast majority of the economic gains for the past several decades:<br />
</p>
<ul><li class="rteindent1">Between 1979 and 2007, the top 1 percent took home well over half (53.9 percent) of the total increase in U.S. income. Over this period, the average income of the bottom 99 percent of U.S. taxpayers grew by 18.9 percent. Simultaneously, the average income of the top 1 percent grew over 10 times as much—by 200.5 percent.</li>
<li class="rteindent1">Lopsided income growth characterizes every state between 1979 and 2007.</li>
<li class="rteindent1">In four states (Nevada, Wyoming, Michigan, and Alaska), only the top 1 percent experienced rising incomes between 1979 and 2007, and the average income of the bottom 99 percent fell.</li>
<li class="rteindent1">In another 15 states the top 1 percent captured between half and 84 percent of all income growth between 1979 and 2007....</li>
<li class="rteindent1">After incomes at all levels declined as a result of the Great Recession, lopsided income growth has reemerged since the recovery began in 2009, with the top 1 percent capturing an alarming share of economic growth.</li>
<li class="rteindent1">University of California at Berkeley economist Emmanuel Saez estimates that between 2009 and 2012, the top 1 percent captured 95 percent of total income growth.</li>
</ul><p> <br />
Is this trend toward growing inequality necessarily a bad thing? Not everyone believes that it is. As Holly Ellyatt <a href="http://www.cnbc.com/id/100361302">reported</a> for CNBC.com on January 8, 2013:<br />
</p>
<div class="rteindent1">Thomas Garrett, assistant vice president at the St. Louis Federal Reserve, wrote in 2010 that income inequality in the U.S. was "not so bad."<br />
<br />
"Although many people consider income inequality a social ill, it is important to understand that income inequality has many economic benefits and is the result of - and not a detriment to - a well-functioning economy," Garrett wrote...<br />
<br />
Income inequality, he adds, is "a by-product of a functioning capitalist society" and the wealthiest had more, because they were more productive, Garrett affirmed.<br />
<br />
He is not alone. Edward Conard, a former partner at asset management firm Bain Capital argued that inequality was actually good for economic growth. In his book, "Unintended Consequences: Everything You've Been Told about the Economy is Wrong," Conard said that concentrating wealth in a skilled investor class helps fuel U.S. innovation, a tenet of the "American Dream."</div>
<p> <br />
But many others see inequality as a scourge. Religious figures such as Pope Francis argue that it is morally wrong for vast amounts of wealth to be concentrated in the hands of the few while millions of others struggle to pay for the basic necessities of life. On April 28, 2014 the Pope tweeted, "Inequality is the root of social evil."<br />
<br />
David Callahan, senior fellow at the liberal think tank Demos, argues that dramatic inequality is also bad for the economy. In a November 18, 2013 <a href="http://prospect.org/article/single-best-argument-against-inequality">post</a> for the <em>American Prospect, </em>Callahan writes:<br />
</p>
<div class="rteindent1">This argument follows a simple causal chain: unequal growth concentrates wealth in the hands of a tiny slice of consumers who can only spend so much money. In turn, the vast majority of earners are left with little extra cash for goods and services. Resulting weak demand undermines growth. Low growth makes everyone poorer than they otherwise might be, including those who own the means of production. Inequality produces other bad economic outcomes, too, such as the underutilization of the nation's human capital, inadequate public investment in both human and physical capital, and social ills that are costly to address, diverting away resources from investment. <br />
<br />
It all makes sense. And it makes sense whether the economy truly stinks like it does now, or is simply underperforming, which was the case through much of the Bush years.<br />
<br />
What's more, this critique of inequality doesn't just appeal to those who are hurting or care about fairness. It appeals to anyone who wants more customers for their goods and services. Or anyone who wants America to compete well against China and Germany in coming decades.</div>
<p> <br />
Many policymakers and ordinary citizens are calling for government action to address the widening wealth gap. <br />
<br />
</p>
<p><strong>For Discussion:</strong></p>
<p><strong>1. </strong> Do students have any questions about the reading? How might they be answered?<br />
<br /><strong>2. </strong> Are you surprised by the statistics about inequality presented in the reading? Why or why not?<br />
<br /><strong>3.</strong> Some people do not think inequality is necessarily a bad thing. What are some of their arguments?<br />
<br /><strong>4. </strong>How do critics of inequality respond? Why do they think we should be worried about this issue?<br />
<br /><strong>5. </strong> What do you think? Should growing inequality be a matter of public concern? Is it consistent or inconsistent with the type of country you would like to live in?<br />
<br />
</p>
<hr /><h4><strong>Student Reading 2:</strong></h4>
<h3><strong>Addressing Inequality: Is Progressive Taxation the Answer?</strong></h3>
<p>Economists, advocates, and policymakers have proposed a variety of ways to address the issue of inequality. One common proposal—which is defended by Thomas Piketty in his book, <em>Capital in the Twenty-First Century</em>—is that tax rates should become more progressive. This means that those with the most money should pay a larger share of their earnings in taxes to benefit the public good. This proposal has prompted a debate about whether such taxes would help to promote "equality of opportunity" in the United States.<br />
<br />
In a February 16, 2014 <a href="http://www.washingtonpost.com/opinions/larry-summers-changing-the-tax-code-could-help-curb-inequality/2014/02/16/9e9c736e-9595-11e3-afce-3e7c922ef31e_story.html?hpid=z3">op-ed</a>, for the <em>Washington Post</em>, Larry Summers, a Harvard economist and former U.S. Treasury Secretary, argued that fighting inequality will require closing loopholes through which the wealthy avoid paying taxes:<br />
</p>
<div class="rteindent1">It is not enough to identify policies that would reduce inequality. To be effective, they must also raise the incomes of the middle class and the poor. Tax reform would play a major role here. Beyond its adverse effects on economic efficiency, today's tax code allows a far larger share of the income of the rich to escape taxation than the poor or middle class. For example, last year's stock market growth represented an increase in wealth of about $6 trillion, with the lion's share going to the very wealthy. It is unlikely that the government will collect as much as 10 percent of this given the capital gains exemption, the ability to defer unrealized capital gains and the absence of any tax on gains on assets passed on at death.<br />
<br />
Meanwhile, the ratio of corporate tax collections to the market value of U.S. corporations is near a record low, thanks to various loopholes. And the estate tax can be substantially avoided by those prepared to plan and seek sophisticated advice. Closing loopholes that only the wealthy can enjoy would enable targeted tax measures such as the earned-income tax credit to raise the incomes of the poor and middle class more than dollar for dollar by incentivizing working and saving.<br />
It is ironic that those who profess the most enthusiasm for market forces are least enthusiastic about curbing tax benefits for the wealthy. Sooner or later, inequality will be addressed. Much better that it be done by letting market forces operate and then working to improve the result than by seeking to thwart their operation.</div>
<p> <br />
Many conservatives balk at the idea of tax increases, however. One reason for this, they argue, is that progressive taxes subvert the important American principle of "equality of opportunity." This concept holds that what is important is not that Americans possess roughly equal levels of wealth. Instead, people should have a fair chance to succeed or fail based on their efforts. Republican Congressman and former Vice Presidential candidate Paul Ryan expressed this position in an October 2011 <a href="http://www.weeklystandard.com/print/blogs/saving-american-idea-rejecting-fear-envy-and-politics-division_604030.html?page=1">speech</a>. Ryan argued:<br />
</p>
<div class="rteindent1">These [proposed tax increases] starkly highlight the difference between the two parties that lies at the heart of the matter: Whether we are a nation that still believes in equality of opportunity, or whether we are moving away from that, and towards an insistence on equality of outcome.<br />
<br />
If you believe in the former, you follow the American Idea that justice is done when we level the playing field at the starting line, and rewards are proportionate to merit and effort.<br />
<br />
If you believe in the latter kind of equality, you think most differences in wealth and rewards are matters of luck or exploitation, and that few really deserve what they have.<br />
<br />
That's the moral basis of class warfare - a false morality that confuses fairness with redistribution, and promotes class envy instead of social mobility.</div>
<p> <br />
<br />
But is equality of opportunity a reality in our country, given our level of inequality? In a March 9, 2014, article in the <em>New York Times</em>, economist Paul Krugman writes that raising taxes on the wealthy can be seen as a way of improving educational opportunities for all and creating a more level playing field between the children of the wealthy and those from families with fewer resources. Krugman <a href="http://www.nytimes.com/2014/03/10/opinion/krugman-liberty-equality-efficiency.html">writes</a>:<br />
</p>
<div class="rteindent1">[T]he ever-popular slogan that we should seek equality of opportunity, not equality of outcomes... may sound good to people with no idea what life is like for tens of millions of Americans; but for those with any reality sense, it's a cruel joke. Almost 40 percent of American children live in poverty or near-poverty. Do you really think they have the same access to education and jobs as the children of the affluent?<br />
<br />
In fact, low-income children are much less likely to complete college than their affluent counterparts, with the gap widening rapidly. And this isn't just bad for those unlucky enough to be born to the wrong parents; it represents a huge and growing waste of human potential — a waste that surely acts as a powerful if invisible drag on economic growth.<br />
<br />
Now, I don't want to claim that addressing income inequality would help everyone. The very affluent would lose more from higher taxes than they gained from better economic growth. But it's pretty clear that taking on inequality would be good, not just for the poor, but for the middle class...<br />
<br />
In short, what's good for the 1 percent isn't good for America. And we don't have to keep living in a new Gilded Age if we don't want to.</div>
<p> <br /><strong>For Discussion: </strong><br />
<br /><strong>1. </strong>Do students have any questions about the reading? How might they be answered?<br />
<br /><strong>2. </strong>What are progressive taxes? What is the argument for why some people should pay a larger percentage of their income in taxes than other people? Do you agree or disagree with these arguments?<br />
<br /><strong>3. </strong> Other taxes, such as a tax on gasoline, are considered "regressive." What characterizes a regressive tax? What might be the downside to regressive taxes?<br />
<br /><strong>4. </strong> Representative Paul Ryan distinguishes "equality of opportunity" from "equality of outcome." What is the difference between these two concepts?<br />
<br /><strong>5. </strong> Do you think equality of opportunity is a reality in America today? Why or why not?<br />
<br /><strong>6. </strong> What steps might be taken to ensure greater equality of opportunity? Do you think more progressive taxation would have a positive or negative impact in achieving this goal? Defend your position.</p>
<p> </p>
<hr /><p><strong>Classroom Exercise:</strong></p>
<h4><strong>Quantitative Literacy—Thinking Critically About How Inequality is Represented</strong></h4>
<p>Like many other economic issues, discussion of inequality in America often involves a variety of charts and graphs. These provide visual illustration of some of the relevant data on the issue. However, there can be a lot of variation in the way in which data is presented. The following exercise is designed to have students think critically about the graphic presentation of data around inequality. It is divided into three parts.<br />
</p>
<p><strong>Part I:</strong></p>
<h4><strong>Graphing Household Income</strong></h4>
<p>The two graphs on the following page chart income distribution in America. Although the two graphs are similar, they have important differences. Have students examine the two graphs and discuss the questions below.<br /><br clear="all" /><br /><strong>GRAPH 1:</strong><br />
<br /><img alt="" src="https://www.morningsidecenter.org/sites/default/files/pictures/Inequality%20in%20America%20graph1.png" style="width: 486px; height: 608px;" /><br clear="ALL" /><br /><strong>GRAPH 2:</strong><br />
<img alt="" src="https://www.morningsidecenter.org/sites/default/files/pictures/Inequality%20in%20America%20graph2.png" style="width: 486px; height: 319px;" /><br /><br clear="all" /><br />
<br /><strong>Questions for Discussion: </strong><br />
<br /><strong>1. </strong>How does the graph on the top differ from the graph on the bottom?<br />
<br /><strong>2.</strong> In what ways does the inclusion of the top 1 percent in the Mother Jones graph (Graph 1) affect the presentation of the remaining data? What are some of the positive and negative consequences of tracking the top 1 percent as its own line on the graph?<br />
<br /><strong>3.</strong> Considering how the second graph represents the data, do you think the first graph could be misleading? Why or why not?<br />
<br /><strong>4.</strong> Some people might argue that we don't need to be concerned about inequality because "a rising tide lifts all boats." How do these graphs affect your view of that argument?</p>
<p> </p>
<hr /><p><strong>Part II:</strong></p>
<h4><strong>Different Approaches to Visualizing Data</strong></h4>
<p>In April 2012, Mother Jones magazine posted on its website a <a href="http://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph.">series of infographics</a> that present data on inequality in different ways. <br />
<br />
Have students examine the graphics on the Mother Jones site, then reflect as a class or in small groups on the following questions:<br />
<br /><strong>1.</strong> What are some of the different methodologies that this magazine uses to present data about inequality?<br />
<br /><strong>2. </strong>Which graphic most stood out for you? Why do you think that this one was particularly effective?<br />
<br /><strong>3.</strong> Were there any graphics that you found confusing? How might this have been more clear?<br />
<br /><strong>4.</strong> Were there any graphics that you thought were misleading in the way that they presented data? Why?<br />
<br /><strong>5.</strong> People often talk about income distribution as which group has the largest "piece of the pie." However, this set of graphics does not use any pie charts. Could you make a pie chart based on the data presented? What would be the advantages or disadvantages of presenting the data in this way?<br />
</p>
<hr /><h4><strong>Part III:</strong></h4>
<p>Many videos attempt to make static charts and graphs more dynamic. This <a href="https://www.youtube.com/watch?v=QPKKQnijnsM">video</a> on inequality represents one such effort.<br />
<br />
Watch the video, then, as a class or in small groups, reflect on the following questions:<br />
<br /><strong>1. </strong>How is the data presented in the video similar to the graphs above and to the other infographics you have considered? How is it different?<br />
<br /><strong>2.</strong> Did you find the video to be a more interesting presentation of the data or was the animation unnecessary? Explain your position.<br />
<br /><strong>3. </strong>Can you think of any other examples of where statistical information has appeared in video format? What impression did these examples make on you?<br />
<br />
<br />
</p>
</div>
<span><span lang="" about="https://www.morningsidecenter.org/fionta" typeof="schema:Person" property="schema:name" datatype="" xml:lang="">fionta</span></span>
<span>June 23, 2014</span>
Mon, 23 Jun 2014 14:48:25 +0000fionta530 at https://www.morningsidecenter.org